Japanese carmaker Nissan Motor Co. Ltd. will be cutting its vehicle output in China in the coming months, as global auto firms attempt to deal with faltering demand in the world’s largest car market.
A source with knowledge of the matter stated on Friday that Nissan intends to reduce production in China by 30,000 units in the December-February period from its original output plans.
The report makes Nissan the latest carmaker to slash production in the country, where a sluggish economic growth and a damaging trade war with the US have left vehicle sales in a weakened state in the past few months.
Auto companies initially determine the number of vehicles to produce at each of their plants, although this can be adjusted due to demand, supply chain problems, and other factors. It was not known how much Nissan intends to produce in the three months.
During the three-month period ended February this year, the Yokohama-based firm has manufactured almost 400,000 units in China. The period covers the first couple of months of 2018, when sales are often slow in the run-up to the Lunar New Year holidays.
Prior to the news, a Japanese media firm reported on Thursday that Nissan plans to make fewer vehicles at three factories in China.
The three plants included one in Dalian, where it manufactures the popular Qashqai and Infiniti QX50 SUV crossover models. The other one was located in Zhengzhou, where it produces the X-Trail SUV crossover, one of its best-sellers, and Venucia brand models.
A spokeswoman for Nissan in Beijing has refused to comment on future production plans.
China’s Booming Car Demand Hits the Brakes
China is Nissan’s second-biggest market, making up about one-quarter of its yearly global vehicle revenue. Last year, the automaker was able to sell 1.5 million units in the country.
Nissan also announced earlier this year its plans to raise sales to 2.6 million cars by 2022, making China its no.1 market in terms of vehicle sales.
The robust automobile demand in the country, however, appears to have hit the brakes, with the major market set to post a decline in annual revenue for the first time since at least 1990.
Nissan’s group sales in China climbed by 3.9 percent in the January-November period, slowing from a 12 percent increase registered in 2017.
The slowdown in the world’s largest car market also comes at a sensitive time for the Japanese auto firm.
Nissan is currently dealing with a scandal involving an alleged financial misconduct of former chairman Carlos Ghosn, leading to his arrest and ensuing dismissal as chairman, as well as damaging Nissan’s relationship with its French partner Renault SA.
Ghosn remains in custody and will not have a chance for release until January 1.
Shares of Nissan ended the session with a 0.5 percent loss to ¥880.3 on Friday.
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