Nearly three years following the arrest – and subsequent flight from justice – of Nissan Motor Co. (OTCPK:NSANY) Chairman Carlos Ghosn for alleged financial misdeeds, the automaker is struggling to regain stability and momentum after the related falling out with its one-time alliance partner, French automaker Renault SA (OTCPK:RNLSY).
The worldwide collapse of automotive production in the second quarter, a consequence of the global pandemic, has further wounded an already-hobbled Nissan.
Key to Nissan’s recovery is a return to profitability, which likely hinges on success in its most important and profitable market, the U.S. Sales in the U.S. reached a peak of about 1.6 million in 2017, falling to 1.2 million for the fiscal year ended on March 31.
Steep Loss, Shrinking Capacity
In May, Nissan posted a $6.2 billion loss and announced a program to cut global vehicle-making capacity. The automaker has been operating manufacturing capacity to produce about seven million light vehicles, though it barely can sell five million.
CEO Makoto Uchida said he hoped Nissan would be generating positive cash flow by the end of 2021. Nissan also said it would be cooperating more closely with Renault, which owns 40% of its shares. The cooperation entrails Nissan’s focusing efforts on Japan, China and the U.S. – while letting Renault SA concentrate on Europe and Latin America. (A third alliance partner, Mitsubishi Motors (OTCPK:MMTOF), will put its efforts toward the southeast Asian market). Under the restructuring, Nissan is cutting global capacity to 5.4 million vehicles.
Among the Nissan plants to survive the cut is its massive complex in Smyrna, Tennessee, where the new third-generation Rogue is being built. To maximize capacity for Rogue, Nissan is moving production of the Altima sedan to its plant in Canton, Mississippi, which until now had been devoted mostly to trucks