Reuters is reporting that Nissan will be cutting sales targets by one million units or more for this year. The report claims management at the ailing manufacturer has seen the need to restructure into a smaller company right away. COVID-19 is seen as a huge contributor to the need for the revision.
Nissan has had a hard time in the last few years. Profits and had been dipping, and cash was becoming scarcer as the company tried to expand. Targets had been as high as eight million units while the company was under Carlos Ghosn.
Stepping back from eight million unit sales
Since Ghosn’s removal in April 2019, the company has been stepping back those aspirations. Back in July of 2020, then CEO Hiroto Saikawa outlined a plan with a more conservative six million unit sales goal. Now, according to the Reuters report, with the COVID-19 pandemic impacting the global economy, the current management at Nissan seems to be considering that the six million unit target is overly robust as well. So, the plan is to make an announcement regarding restructuring and an estimate cutting sales to about five million units. The date of the announcement has not been released yet.
One million unit sales cut, or more
Reuters goes on to state that sources familiar with the news claim the changes may not stop at a five million unit revision,
“For years, Nissan was looking for annual sales volumes around 7-8 million vehicles. The company has never managed to sell much more than 5 million or so,” one of the sources told Reuters. “The company can no longer consider this sort of wishful thinking. The resizing issue is really being taken into account, it has a lot of consequences on operations for 2020-2022.” A third senior company source said the figure could be even lower than 5 million given the impact of the virus, which has hammered car demand around the world.
Although the senior company sources for the Reuters article refused to be identified, this seems to be in keeping with what is currently happening. Nissan is not alone. Indeed, the unexpected COVID-19 influence has impacted all automotive manufacturers. Sales estimates have been revised or will be revised soon by the manufacturers to be more in keeping with the current recovery environment. Plant shut-downs are not something that was anticipated when initial estimates for the year 2020 were created.
Unit sales expectations in the United States
According to L. Wagner, at Statista.com, a market and consumer data research group, sales in the United States across all manufacturers could range between 14.5 and 16.4 million units in 2020 if COVID-19 is handled quickly. If the pandemic crisis continues, the picture worsens. For comparison, unit sales in 2019 were 17 million vehicles.
Last month’s sales figures
Last month’s sales figures for Nissan were weak as well. According to Goodcarbadcar.net, Nissan’s sales dropped 55.97% when compared to the same month in the previous year. This was the largest drop of all manufacturers, although drops in sales were consistent with all manufacturers. Keep in mind that the full effects of manufacturers shutting down production to deal with COVID-19 affected the tail end of March for the most part. April is something everybody is still trying to figure out.
If Reuter’s sources are accurate, then Nissan cutting sales targets by one million units or more for this year may be a step in the right direction in the recovery of the company. However, the company was already tight on funds, and a restructure with those cuts in mind is probably very dependent on what happens with the COVID-19 recovery. So, Nissan, like everybody else, is likely watching the pandemic news very closely.