Nissan's US factory workers are being forced into a harsh reality

Originally sold under the name Datsun in the United States, Japanese automaker Nissan once offered cars that closely matched the quality of well-known domestic rivals like Toyota TM and Honda  (HMC) .

However, over the past few months, the once formidable automaker has lagged behind its contemporaries. The maker of the Z car, the GT-R supercar and the Altima needs to get out of a tough spot.

In early November 2024, Nissan CEO Makoto Uchida sounded the alarm, saying the automaker needed bold restructuring in order to get out of an “extremely tough situation.” 

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In addition to some adjustments to its sales and operating outlooks, it sought to save $3 billion by reducing its workforce, slashing a significant part of its production capacity, and selling a sizable share in domestic rival Mitsubishi.

“The question is how to do it fast and adapt to reality,” Uchida said. “We cannot deny the fact that our sales plan was overstretched given the rapid changes in markets.”

The same month, an unnamed senior Nissan exec told the Financial Times that the automaker was existing on borrowed time.

“We have 12 or 14 months to survive,” the senior official told FT. “This is going to be tough. And in the end, we need Japan and the US to be generating cash.”

Nissan’s has a huge Southern dilemma 

Following a sales slowdown, Nissan wants to reduce the headcount at the factories that make its Rogue SUV and the midsize Altima sedan. 

Beginning in April, the assembly lines at Nissan’s Smyrna, Tennessee, and Canton, Mississippi factories will transition from a two-shift schedule to a one-shift schedule, effectively cutting yearly production by an estimated 12%, or 63,000 cars, this year from its total US production. 

In addition, cuts abound for workers at the Decherd Powertrain Assembly Plant in Decherd, Tennessee. According to Nissan, 1,700 employees at the plant make four, six and eight-cylinder engines for various Nissan and Infiniti cars, including the Altima and the Rogue, other models like the Frontier and Titan pickup trucks, as well as the electric motor assembly in Nissan’s Leaf electric car. 

The Rogue and the Altima are Nissan’s bestselling cars. Of the  865,938 Nissans that were delivered last year, Rogues and Altimas accounted for 42% of sales. 

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David Johnson, Nissan’s North American head of manufacturing and supply chain management, told Automotive News that the changes are a “momentary reaction” to demand.

“We see the market being very challenging for certain product lines,” Johnson said. “Plant utilization rates are not so favorable right now, especially when you look at the two-shift pattern.”

But while it sounds good on the outside, Nissan data shows that sales of the Rogue and Altima are dipping. Last year, Rogue sales fell 9.5%, while Altima sales dropped by 11%. The delayed launch of the 2024 Rogue last year caused sales to be plagued by oversupply. 

In addition to the production adjustments, A Nissan insider told AN that it’ll start offering voluntary severance buyouts to more than 1,500 employees, with the most generous offers being offered to more senior, more experienced staff members.

“It’s a great opportunity for those that want to do something with their career, or just go into retirement,” Johnson said. “It’s challenging, but it’s the thing we have to do to be able to make sure that we’re generating the right type of revenues for the company so that we can invest in the future.”

The Honda Question

These changes come as Christian Meunier absorbs into his role as Nissan’s new North American head. In a Zoom meeting with U.S. dealers reviewed by Automotive News, he promised Nissan dealers that he will keep Nissan from making too many cars and bloating its inventory. In the past, it led to intense discounts that hurt dealers’ profitability.

“Car flow, for me, is the center of the universe,” Meunier said. “[Nissan] will build the right car in the right volume […] so that you don’t have too many of this and not enough of that.”

On January 24, Ponz Pandikuthira, Nissan’s North American chief planning officer, told Bloomberg that it’ll stop making the Mexican-made Infiniti QX50 and QX55 and delay EV production at its Canton, Mississippi plant, citing Trump’s EV and Tariff policies.

“If they pull back on the $7,500 credit, we know the rate of adoption is going to slow,” Pandikuthira told Bloomberg. “We certainly don’t want to be in a position of building models there’s no demand for.”

Related: Nissan, Honda merger hangs on one expensive condition

These moves come as Honda is in the early stages of merging with Nissan. On Dec. 23, 2024, the leaders of the Japanese automakers announced that they intend to merge under a holding company in an effort to stay competitive against its rivals, especially those hailing from China.

However, this is not a one-way ticket toward financial freedom for Nissan, as it would need to get its act together in order for the merger to happen. 

“This is not a rescue of Nissan,” Mibe said back in December. He added that Nissan getting its act together was a “prerequisite” for the merger.

In recent reports, Mitsubishi Motors, which is partially owned by Nissan, expressed that it wants out of the Nissan-Honda merger. According to Autoblog, officials in the relatively small automaker feel they won’t have much pull compared to fellow compatriots when it comes to management decisions and its role in the alliance.

The Nissan Motor Company trades on OTC markets in the United States as NSANY and on the Tokyo Stock Exchange under the ticker number 7201.

The Honda Motor Company is listed on the New York Stock Exchange under the ticker HMC. 

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