Nissan announces major cuts, but Sunderland plant safe

Nissan Sunderland

Nissan will maintain Sunderland as European production hub despite closing factories around the world; focus will be on larger models and sports cars

Nissan has committed to the future of its Sunderland factory despite a recovery plan to reduce its production capacity by 20% globally. 

The Japanese firm has today announced its three-year transformation plan, dubbed Nissan Next, during which it seeks to substantially reduce its fixed costs. As part of the plan, it will close its plant in Barcelona, Spain, resulting in the loss of around 2800 jobs. 

The decision comes after Nissan reported its first annual operating loss for 11 years and its biggest for two decades. The company ended the 2019 financial year with a net loss of 671.2 billion yen (£5.08bn) and an operating loss of 40.5bn yen. Sales decreased 10.6% globally from 5.52 million to 4.93 million units, with a slowdown in North America and Europe primarily to blame. 

Nissan will reduce its production capacity by 20% over the next three years, also closing a plant in Indonesia. However, it intends to maintain Sunderland as a production base for Europe and "leverage the Alliance".

That's part of a broader new Renault-Nissan-Mitsubishi Alliance agreement for the three firms to increase technology sharing by focusing on key markets and product lines. Although not confirmed, recent reports suggest the Alliance plans to bring production of Renault models - namely the Kadjar and Captur SUVs - to the UK.

Nissan will also focus on streamlining its global product line-up. President Makoto Uchida admitted that, along with factors such as fluctuating currencies, “the sales decrease continues to weigh on our profit as we suffer from an ageing portfolio and limit profit distribution from our efforts to normalise sales”.

As a result, Nissan will reduce its number of global models by 20% in three years - down from 69 to fewer than 55. Resources will be reallocated to globally competitive models, with the core segments named as the C-segment (Qashqai), D-segment (X-Trail), electric vehicles (EVs) and sports cars. It will also shorten its product lifecycle so that the average age of its model portfolio is less than four years.

As part of the Alliance agreement, Nissan will focus its growth strategy on its most successful markets: Japan, China and North America. It will sustain its business in Europe, Latin America and Asia, but it will focus on its most successful models in each market. It will exit some markets, including South Korea and Russia, killing the Datsun brand in the process. 

In Nissan's home market of Japan, it intends to maintain a leadership in electrification and autonomous technology. By 2023, 60% of its sales are expected to be of electrified models. It also intends to grow its market share in China, with more EVs due to launch. 

In the US, Nissan is "discovering the difficulty of restoring a brand that is damaged", according to Uchida. It will reduce its focus on fleet sales, enhance its SUV and pick-up truck ranges and improve inventory management. 

Europe remains "an important region for Nissan", but the firm acknowledges that market conditions are tough, with a combination of high regulation and competition. It intends to focus on profitable crossover SUVs along with an expansion of its EV line-up, while making greater use of its relationship with Renault.

It's expected that Nissan will reduce its focus on lower-margin segments such as superminis, meaning the future of the Micra looks bleak. 

Electrification will be a core focus going forward. Nissan claims it's on track to introduce more than eight new EVs globally by 2023, while it will expand its e-Power hybrid system across more regions and target a million electrified sales by 2023.

The company is also on track to achieve more than 1.5 million sales of models equipped with its ProPilot driving assistance system.

*READ MORE*

*Renault-Nissan-Alliance members to massively increase technology sharing*

*Renault in talks to build SUVs at Nissan Sunderland plant*

*Nissan gives Sunderland plant £400m boost to build new Qashqai*