Automotive Apocalypse: Nissan Going Out of Business?
It is Nissan's time in the spotlight.
After highlighting Stellantis and Volkswagon, another auto manufacturer is in the crosshairs. Nissan is the next one to issue urgent warnings regarding its business.
As stated on a number of occasions, this is what disruption looks like. We are viewing it in real time.
The automotive industry is being completely upended. My forecast, make a number of years ago, that there will be two automakers in the future, Tesla and the Chinese, is looking better.
Does that mean everything tied to legacy auto will die? No. We will see consolidation, mergers, and downsizing. The point is the major players will be what was just mentioned.
Image from article linked below
Nissan Heading Out Of Business?
CEO Makoto Uchida just put Nissan into "emergency mode". The company is going to lay off thousands along with slowing down production. Guidance was scaled down, alerting the rest of the industry as to what is taking place.
On November 7, 2024, Nissan announced that it would be cutting 9,000 jobs and reducing its global production capacity by 20%, aiming to streamline operations and save $3 billion. These actions follow a lowered annual profit outlook, a forecasted 74% decline in operating profit, and a sales projection that’s down 1.2% from 2023.
At the core of this is the fact cars simply are not moving for Nissan.
Data from Caredge Insights shows that current inventory for the two remains sky-high. In November, there’s a 142-day supply of the Nissan Rogue, and 153 days of supply for the Frontier. That’s 60% above the overall market average today.
It becomes obvious why production cuts are required. This is similar to what Stallentis is facing, dealership lots that are full of cars.
Automobile manufacturing is a capital intensive business. When sales slow, big money is needed to keep things floating. The entire industry is smaller (sales wise) than it was in 2017. Additional misery was added as electric vehicles garnered market share, meaning Tesla and the Chinese gained.
Of course, it had to come at the expense of someone else.
Legacy manufacturers are the ones taking it on the lip.
Missing The Boat
Nissan, like most legacy companies, are late to the game.
Here is how it plans to adapt to the future:
Nissan has also announced plans to introduce new hybrid models to the U.S. market. The Rogue will soon offer two hybrid variants: a plug-in hybrid developed with Mitsubishi and an e-Power series hybrid. This move to expand Nissan’s hybrid lineup is intended to help the company compete in a growing market. Right now, rivals like Toyota and Honda currently lead the hybrid sector.
The company believes that jumping on the hybrid parade is the answer. Unfortunately, this is going to be short-lived. Over the next half decade, the appeal of hybrids is going to decline.
At present, there are a few drivers of this market.
It starts with range anxiety, something that is being addressed. Similar to this, charging in apartment and condominium complexes is almost non-existent.
We also have affordability. In the US and European markets, EVs are premium vehicles. The reason for this is the Chinese are being kept out via tariffs. Thus, the EVs from Tesla and legacy auto are more expensive.
This is not the case in China where those manufacturers have a plethora of affordable EVs. There are also a lot of hybrids available.
My guess is that, by the time, these models are rolled out, the parade will be over.
I stand by the future is purely electric. China is the largest automotive market, moving rapidly in that direction. The other two major regions are lagging yet also seeing market share gains.
How is Nissan going to weather the storm? It is going to be difficult.
Posted Using InLeo Alpha
Will this be the first of many to come? Thought it was the german brands that was in trouble 😅
Nissan has been living on a roller coaster in recent days but, of course, the company is still immersed in one of the biggest crises in its history, if not the one that has the greatest relevance due to the challenges it offers: completely restructuring the company at one point. of inflection, with the electric car as a hinge.
They are potentially in a death roll.
We will see if they can pull out of it.
Good especially for the issue of Chinese electric cars, which are extremely cheap and attractive to the public and have taken away a very great competitiveness from Nissan. Let's hope that Nissan can compete in a healthy way and that suits it to be able to recover part of the international market share.😊
Had some youtube rabbit hole on new Chinese electric cars, and i must say if countries stopped with tariffs to jack up the prices there will only be Chinese cars.
Stuff that they make for 15-20k is pretty crazy.
That is true and it is why there are tariffs. Legacy auto cannot compete with the Chinese EV makers.
I switched from Toyota RAV4 to Kia Sportage PLug in hybrid. Did not see a similar Nissan....
I sold my beloved gas car in 2021 and am faithfully waiting for my need to improve before purchasing my 1st electronic car. I will not buy another gas/hybrid car, that's for sure, and I have little need for any car living in New York City.