A top Nissan official, who laid out the auto major's global production plans for the next three years, said countries that were part of the ‘Nissan Power 88’ strategic plan will see their operations downsized
The loss-making Indian entity of Nissan Motor Co may be on the list of countries where the Japanese giant will scale down operations by shuttering at least one production line.
A top Nissan official, who laid out the auto major's global production plans for the next three years, said countries that were part of the ‘Nissan Power 88’ strategic plan will see their operations downsized.
India, where Nissan has been struggling since its entry in 2005, was one of the countries to benefit from the Power 88 plan, which was formulated under the then CEO Carlos Ghosn, who was later ousted from Nissan over alleged financial irregularities.
“One of the two lines have been suspended in some plants. In some locations we may choose to suspend the second line. This is a crude description, but loss-making facilities would be the main targets,” Hiroto Saikawa, President and CEO, Nissan Motor Company, said.
Saikawa did not name all the countries or the legal entities where the scaling down of operations would take place. He said such topics are sensitive for discussion and a formal announcement would be made in due course. He, however, gave ample inklings to indicate that India is on the radar.
“How do we better utilise domestic (Japan) capacity is a different issue. Depending on the model, there could be differences on the supply side. We are targeting Nissan Power 88 invested lines, which were built for compact cars, and much of our plan is to reduce those capacities,” added Saikawa.
Bringing back Datsun from the dead was part of the Power 88 plan of Ghosn. He hoped to battle it out with Maruti Suzuki and Tata Motors in the low-cost segment as he felt Nissan could instead retain its image and be used to compete in the premium segment.
When asked to specify the names of the companies Nissan is targeting to downsize operations, Saikawa said, “I cannot comment further but Datsun was included in the portfolio. I also said compact cars and foreign venues, which are clues for you. We may shut down one production line or we may shut down the entire plant.”
The Japanese giant has already shut eight production lines across the globe in 2018-19. Production lines at another six locations have been identified and will cease operations in 2020-22.
A mail sent to Nissan Motor India seeking details about decision to curtail production, its impact on India and if brand Datsun will continue or not after the implementation of Bharat Stage VI (BS-VI) remained unanswered at the time of printing this article.
More than 12,500 employees would lose their jobs at Nissan-operated plants by the end of the new plan across the globe. Of these, over 6,400 people have lost their jobs and an additional 6,100 employees could be next by the end of its restructuring plans.
Nissan's domestic passenger vehicles sales slumped 31 percent to 36,525 units last fiscal, even though the industry marked a growth of three percent during the same year. Even its exports were down 15 percent year-on-year to 57,647 units in FY19, while the industry saw a drop of 10 percent, as per data shared by the Society of Indian Automobile Manufacturers (SIAM). Sales of Datsun slumped 28 percent to 28,995 units last year.
Evalia, Teana, 370Z and X Trail are the models that were phased out by Nissan in India over the last few years. The company had to exit its loss-making venture with Ashok Leyland, which produced light commercial vehicles, after a bitter spat with the Chennai-based truck maker. Nissan currently sells Micra, Sunny, Terrano and the recently launched KicksDatsun models such as Go+, Redi-Go and Go has failed to dent demand for Maruti Suzuki and Tata Motors despite actor Aamir Khan coming on board to promote the beleaguered brand.Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.