Japan Carmakers Trim Production Plans
Production plans are heading south for Nissan, Toyota and Honda because of the coronavirus pandemic.
They won’t be alone. Carmakers reported grim first-quarter sales and earnings results, benchmarking the onset of the health crisis. Now the question is: When, where and how strongly will sales recover in 2020 and beyond?
Revising Nissan’s Revival Plan
Nissan, already in sales trouble before the virus hit, doesn’t expect relief for at least two years, The Nikkei reports.
Nissan’s global sales fell 8% to 5.18 million in 2019. The company began tightening its belt last summer by laying off 12,500 employees, trimming its model lineup by 10% and cutting production.
Now it’s bracing for sales that don’t top 5 million units for at least another three years. Since the carmaker has the annual capacity to make 7 million vehicles, plant closures and facility selloffs appear inevitable.
The American market, which normally delivers about one-third of Nissan’s sales (and 20% of its operating sales) may not help. Last year, the company’s sales in the U.S. dropped 10%. They plunged another 30% in the first three months of 2020.
Production Cuts at Toyota
Toyota also is bracing for a rough year. The company will slash domestic production—including vehicles for export—by about 50% next month, The Nikkei says.
Normally, Toyota exports two-thirds of the vehicles it makes in Japan, 40% of them to the U.S. Earlier this year the company forecast its domestic production would drop 5% to 3.2 million units this year. It may be deeper, because the company doesn’t expect a big sales rebound in the U.S. this year.
“The lack of prospects for recovery in the North American market is a major reason” for Toyota’s production cut, a company source tells the Tokyo-based business newspaper.
Toyota’s factories in Japan began running 20% below their usual output at the beginning of April, when the company idled seven assembly plants.
Honda, whose U.S. plants have been idle since March 23, said today it will continue the temporary shutdown by one week to May 8.
The company also is extending more recent furloughs for most of its salaried workers, depending on their location, to May 8-11.
Honda says it is holding back on a return to more normal operations because many U.S. cities and states are continuing stay-home directives that create an obvious roadblock for sales.
We’re sure to see more of this production tweaking in the weeks ahead. Carmakers are trying to gauge the viability of their regional markets against a constantly shifting patchwork of official directives that govern the ability of people to resume something closer to their normal lives.
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