Nissan to reduce presence in Europe

Nissan Motor is planning to further reduce its presence in Europe and outsource the sales and manufacturing of its cars to alliance partner Renault, the daily Yomiuri newspaper reported on Friday.

As part of its global turnaround plan, which is reversing a rapid expansion led by the ousted former chairman, Carlos Ghosn, Nissan will cut its distribution channels in thirty countries, mainly in East Europe. It is also planning to close its Avila plant in Spain and convert it into a warehouse, the report said.

The Japanese motor company is currently moving its operations away from Europe and shifting its focus to China, the United States, and Japan.

Nissan, which expects to post a record operating loss of  ¥340 billion ($3.25 billion) in the year to March 31, is cutting production capacity and model numbers by a fifth and aims to slash operating expenses by 300 billion yen over three years.

The company’s three-way alliance with Renault and Mitsubishi Motor was plunged into uncertainty in 2018, when Ghosn was arrested on financial misconduct charges, which he denies. He later fled Japan while being monitored by law enforcement and awaiting trial at his residence.

The Brexit deal is also expected to damage Nissan’s European business; although it allows for tariff-free trade, much of the terms need still to be defined.

Automakers including Nissan Motor Co. might struggle to qualify some UK-assembled models for tariff-free export to the EU as they evaluate whether they source enough of their components locally. Costs associated with having to switch suppliers and the burdens of customs declarations, certifications and audits could still leave car companies convinced they’re better off investing elsewhere.

The company recently decided against making an electric model at its factory in northern England and almost two years ago scrapped plans to build another sport utility vehicle at the same site. Honda Motor Co. is closing its only UK car plant next year.