Nissan to cut global output by about 15%

Nissan’s headquarters in Yokohama, Japan. (Bloomberg pic)

TOKYO: Nissan Motor Co is planning to cut global output by around 15 percent for the fiscal year to March 2020, the Nikkei reported, citing unnamed sources.

Japan’s third-largest automaker is moving away from an aggressive expansion campaign encouraged by ex-chairman Carlos Ghosn, and seeking to produce around 4.6 million units, according to the newspaper. The output level, which is being communicated to suppliers, would be the lowest in nine years, the report said.

Nicholas Maxfield, a spokesman for Yokohama-based Nissan, declined to comment on what he called “speculative media reports.” Nissan shares slipped as much as 1.6% in early morning trade in Tokyo. The stock is up 7.7% this year, following a 22% decline in 2018.

Ghosn, who was arrested for the first time in November, is being detained in a Tokyo jail on allegations of misusing Nissan’s money for personal gain. He has denied the allegations as well as formal charges accusing him of falsifying financial information and breach of trust.

Toshihide Kinoshita, an analyst at SMBC Nikko Securities Inc., wrote in a report that the figures, though unverified, suggest production levels well below his projections, and that the negative impact on annual operating profit could be 150 billion to 200 billion yen (US$1.3 billion-US$1.8 billion), although that doesn’t take into account any efforts by Nissan to cut costs or reduce inventory.

In February, Nissan slashed its operating profit forecast to 450 billion yen, to well below analysts’ estimates as sales in China and the US sputter. Nissan will probably report earnings results on May 14, giving investors a look into its performance as the entire industry faces complex issues such as the UK’s potentially jarring exit from the European Union and huge investments in electric and autonomous vehicles.

Nissan is cutting a future target for China car sales by about 8 percent, people familiar with the matter said in March. Output in Japan will remain basically unchanged at more than 900,000 units, while overseas production will fall by 20 percent to around 3.7 million vehicles, the Nikkei reported.

The move may impact earnings and throw a shadow over Nissan’s alliance with Renault SA, the newspaper said.