Nissan is struggling financially, and the brand could soon be dealt another blow when President-elect Donald Trump takes office in January next year.
The incoming President this week said he would impose a 25 per cent tariff on imports from Canada and Mexico, arguing the countries need to clamp down on drugs and migrants crossing the border into the United States.
While that doesn’t necessarily include vehicle imports, it’s enough to raise eyebrows at Nissan. Mexico is home to several of the Japanese brand’s manufacturing plants, with upwards of 300,000 vehicles exported from Mexico to the US so far this year.
In fact, Mexico was the only country in which Nissan’s year-on-year production rose during October, with production dropping by 15 per cent in both the US and China, while the UK and Japan each saw smaller declines.
Looking at January to October figures, production was up by 9.8 per cent in Mexico, again the only market to post an increase.
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Nissan Sentra
Nissan produces a handful of models in Mexico for the US market: the Versa, Kicks, and Sentra, the latter of which is a compact sedan and Nissan’s strongest seller in the US.
The three vehicles are Nissan’s most affordable in the US market.
Plants in Cuernavaca and Aguascalientes produce these models, while an additional plant in Aguascalientes manufactures engines.
In October, Nissan sold 13.4 per cent more vehicles in US in its first year-on-year growth since July. Its sales also increased in Mexico and Canada, but significant declines in China and Europe contributed to a total global decline of three per cent.
From January to October, its sales were up 1.8 per cent in the US compared with the same period this year, though this was offset by a 10 per cent slump in China.
Nissan Versa
In any case, Reuters reports the US accounted for more than 83 per cent of Mexican exports in 2023.
At the time of the initial tariff announcement, Reuters quoted Mr Trump as saying he would impose such restrictions as one of his first moves as President.
“On January 20, as one of my many first executive orders, I will sign all necessary documents to charge Mexico and Canada a 25 per cent tariff on all products coming into the United States, and its ridiculous open borders,” he said.
His intentions come despite the fact that, in 2018, he was one of three leaders to sign the United States–Mexico–Canada Agreement for free trade between the nations. Such tariffs would appear to breach that agreement.
If the tariffs on Mexico do come to fruition, it would become significantly more difficult for Nissan to bring some of its most popular overseas models to the US.
While Nissan does produce several models in the US like the Altima, Rogue (X-Trail in Australia), and Frontier pickup, outputs there are noticeably down on figures from Mexico.
Nissan has so far produced 460,338 units in the US to the end of October this year, compared to Mexico’s 575,366. Additionally, more Nissans were produced in Mexico than in China, the UK, or Japan.
A portion of Mexican production is for its domestic market, but its figure so far this year is an increase of 9.8 per cent on the same period last year. In comparison, US production to the end of October this year has declined 10.6 per cent compared to this time last year.
There is a possibility the tariffs don’t end up being introduced though. Mr Trump threatened tariffs of up to 25 per cent on Mexican vehicles during his first administration, but they never came to fruition.
Regardless, Nissan CEO Makoto Uchida reportedly said his company would closely monitor tariff plans shortly after Mr Trump’s re-election.
Makoto Uchida (Nissan) and Toshihiro Mibe (Honda)
This week, Nissan’s financial situation appeared to worsen as it reportedly began an urgent search for a long-term, steady shareholder as Alliance partner Renault looks to reduce its stake.
At the same time, Nissan reportedly said it would be open to Honda buying some of its shares – a company it partnered with in August this year.
Renault wound back its holding in Nissan from 43.4 per cent to under 36 per cent last year, split between itself and a trust, while retaining a 15 per cent voting stake. It also confirmed plans to gradually reduce its stake in the company.
Additionally, Nissan gained voting rights for its 15 per cent stake in Renault, while confirming it would reduce its stake in fellow Alliance brand Mitsubishi from 34 per cent to 24 per cent.
Nissan announced earlier this month it plans to cut global production capacity by 20 per cent and axe 9000 jobs to “stabilise and right-size” the business, after consolidated operating profit for the first half of Japanese fiscal year 2024 fell 303.8 billion yen (~A$3bn) to 32.9 billion yen (~A$334 million).
That saw Nissan record an operating profit margin of just 0.5 per cent.
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