Nissan to Shut a China Factory for Cost-Cutting Move

【PCauto】It' said that Nissan's Wuhan plant in China is scheduled to discontinue production by the end of fiscal year 2025 (March 2026).

The Dongfeng Nissan Wuhan facility was established in 2019 and entered full operation in May 2022, with a total investment of 9.851 billion yuan. With an annual production capacity of 300,000 vehicles, the plant has flexible manufacturing capabilities for gasoline, hybrid, and electric vehicles, which plays an important role in Nissan's layout in the Chinese market.

However, actual market performance doesn't meet the expectations. Models primarily produced at the plant—including the gasoline-powered X-Trail, X-Trail e-POWER, and ARIYA—have unsatisfied sales. Capacity utilization rate was less than 10% in 2023 and only 19% in 2024.

Nissan's total production capacity in China is as high as 1.6 million units, but the actual output in 2023 was only 737,000 units, with a utilization rate of less than 50%. The annual production of the Wuhan factory, which has an expected capacity of 300,000 units, was less than 30,000 units. The huge idle capacity has caused a heavy financial burden.

In terms of new energy transformation, local Chinese auto companies are rapidly developing in the field of new energy driven by strong momentum, while Nissan is lagging behind in transformation.

In addition, Nissan's global performance is under great pressure. It has laid off 9,000 employees worldwide, cut capacity by 20%, and sold shares in Mitsubishi Motors to raise funds. The closure of the Wuhan factory has become a key step in its global restructuring plan to reduce unnecessary capacity input, lower operating costs, and optimize resource allocation.

The closure of the Wuhan factory has caused a significant impact on Nissan's business in China and the local industrial ecology. In terms of Nissan's business in China, after the suspension of the Wuhan factory, its production plants in China will be reduced to four.

A senior executive at Nissan revealed that they are considering further shutting down other factories, which means that Nissan's capacity in China will face further adjustments.

For the local industrial ecology, many auto parts companies are located in the Wuhan Economic Development Zone. The manager of a company that provides seats for Nissan revealed that since the Wuhan factory stopped working, they have lost over 20 million yuan in orders every month. Some companies had to switch their export business to Southeast Asia, with a transfer cost up to 20% of annual profit.

Facing the dilemma, Nissan and the local area are also actively taking measures. The local government helps parts companies cooperate with new clients such as BYD and Geely through the Yangtze River Auto Supply Chain Platform, and 37 companies have successfully transformed.

At the same time, there are plans to transform the Wuhan factory into an export-specific base, focusing on the production of the plug-in hybrid pick-up Frontier Pro PHEV, and leveraging the overseas channels of Dongfeng Group to enter the Southeast Asian market.

Nissan itself also plans to invest an additional $1.4 billion in China and launch about 10 new electrified models by 2027, trying to save the declining sales in China through product upgrades and technological innovation.

The future of Nissan's development in the Chinese automobile market will adopt the strategy of "In China, for China, to the Global". In terms of product planning and R&D, the number of new energy models launched by the summer of 2027 will increase from 8 to 10, of which 9 are Nissan brand models, including cars, SUVs, pickups, etc., as well as pure electric, plug-in hybrid and other types of power.

Over the next three years, Dongfeng Nissan plans to invest 10 billion yuan to expand its technical center to accommodate 4,000 employees, and reduce the R&D cycle to 24 months, fully authorizing the local team to lead vehicle development.

In terms of technical cooperation and innovation, Nissan has deepened cooperation in the field of intelligent driving assistance and cabin with local science and technology companies such as Momenta and Huawei, established the "Joint Research Center for Sustainable Development of Automobile Industry" with Tsinghua University, and carried out unmanned taxi testing with WeRide in Suzhou, continuously implementing intelligent scenarios.

In terms of export and global layout, domestically developed products like N7 and Frontier Pro PHEV will be exported globally through Nissan's global dealer network in the future, and Nissan plans to use global business resources and advantages of assets in China to develop automobile export business, creating a complete value chain and ecosystem.

In addition, Zhengzhou Nissan will also launch 9 new cars within two years, of which 5 will be Nissan models, including pickup trucks, SUVs and CDV models.

The plan to discontinue production at Nissan's Wuhan plant is not only an important part in Nissan's strategic adjustment in Chinese automobile market, but also reflects the increasingly fierce competition in the Chinese auto market and the challenges and changes faced by multinational auto companies in their development in China. Whether Nissan can achieve a comeback in the Chinese auto market with a series of new measures in the future is worthy of continuous attention.