After years of chronic discounting and an over-reliance on rental fleet sales to boost market share at any cost, Nissan decided last year to undergo a radical detox plan — trading its focus on share for profits.
But now, several months into that difficult journey toward reformation, the coronavirus is threatening to derail the momentum.
Like the rest of the industry, Nissan finds itself in suspended animation and unsure of when consumer demand will return.
The automaker’s large assembly plants in Canton, Miss., and Smyrna, Tenn., went dark for an initial two-week period, starting March 20. The shutdown was then extended twice, with a current restart date of “mid-May.”
Nissan Group’s U.S. sales fell by nearly half in March compared with a year ago, the automaker said, and last week, the Japanese parent company warned that the business interruptions due to the pandemic could result in a net loss of close to $1 billion for the fiscal year ended March 31.
The long-term effects of the health crisis on Nissan’s preexisting recovery remains unknown. In the near term, it could disrupt critical product introductions that were scheduled for this year, including that of the Rogue crossover, the Nissan brand’s biggest seller in the U.S.
The timing of that critical launch, for the Rogue’s first redesign since 2013, has been complicated by the production shutdowns. The Rogue’s April debut was scrapped after the New York auto show was postponed.
Even before the virus decimated demand, about 40 percent of Nissan dealerships were losing money or breaking even. Nissan executives have responded with a relief package that includes guaranteed dealer payouts, relaxed performance objectives and 0 percent interest customer financing.
Meanwhile, Nissan’s global alliance partner Mitsubishi Motors Corp. cut executive compensation nearly in half after forecasting a net loss for the just-ended fiscal year, blaming falling global demand.
At its new U.S. base in Nashville, Mitsubishi is loaning an Outlander PHEV to the Community Resource Center to help deliver supplies to families affected by COVID-19 as well as a tornado there in March.