Nissan has announced a significant strategic shift in its operations within China, where it is scaling back the manufacture of petrol cars to meet the surging demand for electric and hybrid vehicles. The Japanese automaker stated that it was unprepared for the rapid acceleration of new energy vehicle sales in the world's largest automotive market, which has been characterized by an intense price war.
In response to these market conditions, the company revised its annual sales forecast for China downward. Nissan now projects that it will sell between 2.97 million and 3 million vehicles this year, a reduction from its earlier estimate of 3.15 million units. The adjustment reflects the specific challenges the brand faces in maintaining its market share against local competitors.
Ivan Espinosa, the chief executive of Nissan, described the situation in China as the company's most significant current challenge. He noted that consumer demand has weakened while competition has intensified. Espinosa emphasized that the transition to new energy vehicles is occurring at a pace faster than industry analysts had anticipated, creating a difficult environment for established brands.
The company reported that total vehicle sales across China declined by 22% in the first half of the year. This downward trend worsened from July through October, resulting in a 32% drop in sales over the first nine months. Espinosa explained that Nissan's product lineup, particularly the Sylphy saloon models, remained too strongly associated with internal combustion engines, prompting the decision to cut local production and export some products instead.
The automaker is now focusing on ramping up the production of its N series models, which include battery electric vehicles and plug-in hybrids. These vehicles combine smaller batteries with petrol engines to offer a transition solution for drivers. This strategic pivot highlights a broader global challenge for carmakers who are trying to maximize profits from their existing gasoline and diesel fleets while avoiding being outpaced by newer Chinese rivals.
The divergence in global markets is stark. While China moves rapidly toward electrification, Nissan has seen increased sales in its home market and in North America. In those regions, the shift to electric cars has progressed more slowly, partly due to policy decisions such as the removal of certain incentives for battery car manufacturers in the United States.
In Europe, Nissan is managing a complex position. While it pushes for increased electric car production in China, it has been among the manufacturers advocating for a slower transition to batteries in the region. In the UK, the company lobbied to weaken the zero-emission vehicle mandate, seeking to continue selling petrol cars beyond 2035. This stance has come under scrutiny as data indicates rising demand for electric vehicles in the UK, particularly following recent increases in fuel prices.
Recent data from the car sales website Autotrader showed that retail sales of used electric vehicles rose by 56% in October compared to the previous year. Ian Plummer, the chief customer officer at Autotrader, noted that electric vehicles now account for one in ten retail sales on the platform, a significant jump that underscores changing consumer preferences.
Nissan's sole European manufacturing facility is located in Sunderland, northern England. Espinosa expressed hope that vehicles produced in Sunderland and Japan would be included in the EU's proposed "Made in Europe" rules. As currently drafted, these rules would exclude all of Nissan's cars from subsidies and other incentives, adding further pressure on the company's European operations.
