Recently, Nissan Motor Co., Ltd. announced a major production layout adjustment for its best-selling model Rogue, and plans to transfer 50% of its production capacity from the United States to its Kyushu plant in Japan. This move has aroused widespread attention and heated discussions in the industry, not only involving Nissan's own strategic adjustment, but also reflecting the profound changes in the global automobile manufacturing industry under multiple pressures such as cost, market demand and technological transformation.
1. Cost advantage: the dual drive of the yen exchange rate and production efficiency
According to foreign media reports, Nissan Motor believes that the cost of producing Rogue in Japan can be reduced by about 20%, mainly due to the cost advantage brought by the low yen exchange rate. The weakening of the yen has made Japanese-made cars more competitive in the international market, while reducing production costs. In addition, the Japanese plant has higher economics in terms of producing high-spec models and electric versions, which allows Nissan to improve overall profitability by optimizing the production layout.
Nissan Motor plans to reduce costs by approximately JPY 30 billion by improving R&D efficiency, and to shorten the time-to-market and reduce R&D costs by adopting the concept of "family-owned model development." This series of initiatives will be applied to ongoing projects and will begin to yield benefits from 2025. By taking a number of initiatives, Nissan aims to reduce costs by a total of approximately 100 billion yen.
Figure: Nissan is moving back to 50% of the Rogue's capacity
2. Market demand: The rapid growth of electric vehicles in the U.S. market
With the growing demand for electric vehicles in the U.S. market, it is expected that by 2027, 45% of new car sales in the U.S. market will be electric vehicles. Nissan plans to launch the next-generation Rogue in early 2027, along with the e-Power series of hybrids, with a plug-in hybrid model to be launched the following year. This adjustment not only meets the market demand for new energy vehicles, but also enhances Nissan's competitiveness in the field of electric vehicles.
Nissan also plans to launch all-new plug-in hybrid models in FY2025 and FY2026, and to renovate its popular mini cars and large-size vans. In addition, Nissan will expand its lineup of pure electric vehicles, and plans to equip models with new intelligent cockpit and driver assistance functions on models to be launched in fiscal 2026.
3. Factory Operations: Challenges and Responses to the Tennessee Plant
At present, the annual production of Rogue at the Smirner, Tennessee plant in the United States may fall to 120,000 units, a 17% decrease from last year, and the factory utilization rate will fall to 48%, well below the target profitability of 80%. This change poses a challenge to the operation of the Tennessee plant. Nissan is negotiating with U.S. suppliers to lower parts prices to protect production at the Smirner plant. However, as the focus of production shifts to Japan, the Tennessee plant is likely to focus more on producing lower-cost, gasoline-only versions.
Nissan plans to reduce global production capacity by 20% by fiscal 2026 and optimize personnel in the manufacturing field. This includes a reduction in production from 1.5 million to 1 million units already in China. At the same time, the company is taking steps to reduce the production capacity of its factories outside China from 3.5 million to 3 million vehicles, and to increase plant utilization from 70% in FY2024 to 85% in FY2026. Overall, Nissan aims to reduce its global production capacity from the current 5 million units to 4 million units by fiscal 2026, including its Chinese plant.
4. strategic significance: optimize the global production network
This production layout adjustment is an important part of Nissan's plan to optimize its global production network. By relocating some of its production lines back to Japan, Nissan will not only be able to take advantage of the exchange rate to reduce costs, but also avoid potential trade risks. This "transpacific production" model will not only meet the needs of the U.S. market, but also enhance Nissan's competitiveness in the global market.
Nissan Motor plans to reduce costs by approximately JPY 30 billion by improving R&D efficiency. This series of initiatives will be applied to ongoing projects and will begin to yield benefits from 2025. By taking a number of initiatives, Nissan aims to reduce costs by a total of approximately 100 billion yen. In addition, Nissan plans to lay off 2,500 indirect employees worldwide, demonstrating its determination to restructure its human resources.
5. Industry trends: the transformation and challenges of the automobile manufacturing industry
Nissan's move also reflects the challenges and opportunities of the entire automotive manufacturing industry in the transition to electrification. With the rapid growth of the electric vehicle market, the production cost control of traditional fuel vehicles has become the key for car companies to maintain profitability. By optimizing the production layout, Nissan has not only enhanced the competitiveness of the Rogue, but also laid the foundation for the future electrification transition.
Against the backdrop of drastic changes in the global automotive industry, not only Japanese automakers, but also automakers from other countries have been forced to undergo profound changes and strategic adjustments. General Motors (GM) of the United States has terminated its plans to work with Honda Motor Co. to develop low-cost battery electric vehicles and has instead entered into a new partnership with South Korea's Hyundai Motor Company. The move aims to achieve scale in the field of next-generation automotive technologies, such as battery technology and software. Rivian Automotive, an emerging U.S.-based electric vehicle manufacturer, has partnered with Germany's Volkswagen Group. In Europe, Germany's BMW AG and Toyota Motor Corporation announced in September that they will cooperate in the field of fuel cell vehicles.
6. Future outlook: Nissan's electrification strategy
Nissan Motor plans to turn a profit in fiscal 2026 and aims to reduce the break-even point of its automotive business from 3.1 million units to 2.5 million units by optimizing its cost structure, and expects an operating profit margin of 4% to be stable. Achieving this goal requires Nissan to optimize its production layout and adjust its product line on a global scale. By moving some of the Rogue production to Japan, Nissan will not only be able to reduce costs, but also better respond to changes in market demand.
This series of measures by Nissan Motor will not only be an emergency strategy for its own development, but also a prudent layout for future market changes. At present, the rise of smart electric vehicles and hybrid vehicles has brought new impetus to the automotive industry, and it remains to be seen whether Nissan can rise and fall freely in this change. Compared with other car companies, whether Nissan can move forward steadily in the ever-changing market will probably be the focus of attention of all industry insiders.
7. Conclusions
The adjustment of Nissan Rogue's production layout is not only a response to the current market environment, but also a forward-looking layout for future development trends. By optimizing production costs, meeting market demand, and driving the transition to electrification, Nissan has found a new balance in the global automotive market. This move is not only of great significance to Nissan itself, but also provides valuable lessons for the entire automotive manufacturing industry. In the future, it remains to be seen whether Nissan can turn losses into profits through this series of strategic adjustments.
