Tokyo: According to Japan's Yomiuri newspaper report, the Japanese major automaker Nissan Motor has finally set a timeline for the end of vehicle production in China at its Wuhan plant by the end of this current business year, which ends on March 31, 2026.
This was reportedly due to extremely low production levels and increased competition with local car manufacturers. This plant has a capacity of production of 300,000 vehicles per year, while its operation rate is now at less than 10 percent.
The facility has been producing the Ariya electric vehicle and the X-Trail SUV since being leased from the Chinese firm Dongfeng Motor in 2022. Nissan is yet to make a formal announcement regarding the decision but has already been undergoing severe financial problems.
The car maker said it was expecting a record net loss for the fiscal year ending March somewhere between 700 billion yen and 750 billion yen ($4.87 billion to $5.22 billion) due mainly to impairment charges.
Indeed, the shutdown of operations in Wuhan laid bare the rising challenges for all foreign carmakers in the highly competitive automotive market of China. Given how much quicker local firms were getting ahead in innovations of electric vehicles and cheaper models, global counterparts such as Nissan were fast losing grasp in the market.
Analysts opine that Nissan's upcoming move to close operations at the facility could be part of a restructuring effort to reduce loss and reallocate resources to more profitable or strategic markets.
With the constant move of the automobile industry to diversify into electrification and digitalization, the decision made by Nissan is reflective of the hard choices that legacy automakers have to face in the modern era of automotive development.
[Source Credit: Business Recorder]
