Nissan (NSANY, Financial) is facing significant challenges in the U.S. market as consumer purchasing power continues to decline. In response, the automaker is reducing the production of its key models in the U.S. by 30%, risking its global sales target of 3.65 million vehicles for 2024.
Since September, Nissan has been gradually cutting production in the U.S., notifying dealers and suppliers of this strategic adjustment. The company has confirmed that it is adjusting inventories of its critical models, including the Rogue SUV and Frontier pickup, which account for 30% and 10% of its U.S. sales, respectively. These models are manufactured at the Smyrna, Tennessee, and Canton, Mississippi plants, where production was cut by 40,000 vehicles in September and October. The production reduction measures, initially planned to end in October, are now extended through December.
In the latest quarter, Nissan's U.S. sales fell by 2% year-over-year, with the gasoline-powered Rogue SUV suffering a 20% decline. In September alone, Nissan's U.S. production dropped by 24%, impacting Rogue SUV production at both its U.S. and Japan Fukuoka facilities.
The company is also feeling competitive pressure from Toyota and Honda, who offer hybrid models in the U.S., appealing to the growing interest in hybrid vehicles amid slowing electric vehicle demand. Nissan's inventory days have surged to 100, compared to Toyota's 30 days and Honda's 50 days, leading Nissan to increase sales incentives, which are currently 30% above the industry average.
Originally, Nissan aimed to stabilize inventories by September and reduce costs through new model launches, but global sales fell by 4% from April to September, totaling 1.59 million units. Compounding its challenges in North America, Nissan is also experiencing delays in electric vehicle launches and indefinite postponement of new EV production plans at the Canton plant. The declining sales trend in the U.S. suggests that Nissan may need to revise its annual sales forecasts once again.
