Nissan Slowing Output Following Drop in Demand in U.S.

Nissan Motor Co. will slow production at several of its assembly plants in order to maintain the supply of vehicles on the dealers’ lots across the U.S. in check as weaker demand caught the carmaker off guard and bloated its supply.

The second largest automaker in Japan is looking to have a supply of between 50 and 60 days of vehicles in August, when dealers begin transitioning to start selling the 2019 model year vehicles, explained U.S. chief of sales for Nissan Dan Mohnke.

Nissan reached an inventory of 86 days as of September 1 in 2017, and the automaker increased its incentive spending and shipped more vehicles to rental car companies as well as other fleet clients to help lower the number.

Mohnke said the company did not do a good job forecasting the market’s softness so it is playing catch up from a standpoint of production.

Some other competitors might have done somewhat better of seeing the softness earlier thus making adjustments earlier, but Nissan is doing that right now, added Mohnke.

Nissan struggled somewhat more than several other peers in Japan adjusting to the auto market in the U.S. slowing down for only the first time since the global financial crisis created the great recession.

Last month, Nissan cut its forecast for earning for is fiscal year that ends in March, as costlier incentives to push sales across the U.S. weighed on its operating profit.

Toyota Motor as well as Honda Motor, both lifted projections.

While Nissan was able to gain market share in the U.S. during 2017, its increase of 13% in spending on incentives per vehicle was the largest jump amongst the six biggest carmakers. The company boosted its fleet sales 15% in 2017, said one industry analyst.

As of the start of March, the supply of vehicles for Nissan was sitting on 60 days, according to a trade publication. Mohnke, who in October was named to the senior vice president position, said he is expecting to lower the dealer inventory more during the quarter from April through June.

Analysts believe that Nissan is doing the right things but the big question is if they come up short of what their objectives are, will they go into a panic mode once again.

Car and trucks sales have dropped across the U.S. following several straight years of increases and that has made automakers look to other areas for higher revenue streams.