Nissan to cut at least 10% of global lineup by spring 2022

Faced with evaporating profits, Nissan Motor Co. will take the pruning shears to a global lineup that includes more than 60 nameplates across the Nissan, Infiniti and Datsun brands.

The Japanese automaker last week said it will trim its product portfolio by at least 10 percent by March 31, 2022. It's part of a sweeping renovation that also involves cuts in work force and production capacity.

The product reductions will focus mainly on small vehicles, including emerging-market Datsun models, Nissan Motor Co. CEO Hiroto Saikawa said last week at a press conference.

Nissan could also shrink the options and packages offered on its vehicles. The numerous variations are proving expensive and complicated as marketing and incentive supports are strained.

Dave Wright, dealer principal at Dave Wright Nissan-Subaru in Hiawatha, Iowa, agrees that Nissan's lineup is cluttered with too many option packages and trim levels, making it complicated and expensive for retailers to stock their lots.

"If you make a bet on what packages you think a customer is going to want, and they don't want 'em, that car sits and sits and sits," Wright said.

Nissan's compact cars are low-hanging fruit for consolidation in a market that has lost much of its enthusiasm for sedans.

"They've just got too many sedans for this market," said Jeff Schuster, president of global forecasting at LMC Automotive. "I don't see them all go, but I could see consolidation if Nissan looks to the U.S. for the cuts."

Analysts see the Versa subcompact and Sentra compact as redundant in a shrinking sector. Both cars are favorites of rental fleets, a market Nissan historically leaned on to grab market share. Nissan's latest business reboot, however, has it steering away from profit-sapping rental-fleet customers.

"The people who are buying small sedans are people who are really price-conscious," AutoPacific analyst Ed Kim said. "The Versa has a strong value proposition and is well-equipped for its price point."

The market appears to agree. Versa sales are up 6.6 percent through June, compared with a 5 percent decline in Sentra deliveries.

Nissan is not alone in taking the scalpel to an overgrown portfolio. In May, Mercedes-Benz told its U.S. dealers it will drop some models and equipment packages in the coming year. Shifting U.S. consumer preferences have created opportunities for automakers to rethink their lineups.

Nissan has its "bases well covered," Kim said. But he said there is "opportunity to trim the fat" from segments receiving less consumer interest.

But for an automaker that makes product decisions with a global outlook, as Nissan does, killing a model is not so easy. Small sedans may be losing the interest of U.S. consumers, but they are favored by shoppers in the crowded urban areas of Asia.

Sedans are being jettisoned in North America because heavy fleet use makes them unprofitable, said Sam Fiorani, vice president at AutoForecast Solutions. "But most of those vehicles are profitable somewhere else in the world and important to growth of emerging markets," Fiorani said.

Sporty coupes, like subcompacts, find themselves getting Americans' cold shoulders. The two-door Infiniti Q60 had U.S. deliveries nosedive 49 percent through June from a year earlier. Meanwhile, U.S. sales of the Nissan 370Z roadster tumbled 36 percent in the same period.

"There's not much of a market for entry luxury, two-door sporty coupes," Kim said.

Nissan has less wiggle room with its SUV/crossover lineup in North America.

"That's where the market is heading and Nissan covers it very well with a range that extends from the entry-level Kicks to the luxury Armada," Fiorani said.

The pickup portfolio, however, is another matter. U.S. sales of the full-size Nissan Titan are down 23 percent through June.

"The Titan has fallen significantly behind the Detroit 3 and even Toyota," Schuster said. "If Nissan decides it doesn't want to play in that segment because it can't be competitive, the Titan nameplate could go."

Last year, the Titan mustered a mere 2.1 percent share of the full-size pickup segment. Nissan is focusing on the Titan configurations that are selling instead of stocking every possible option.

Nissan's product trimming is not merely a nod to shifting market preferences, but an acknowledgment of the brand's evolving priorities.

Like its industry peers, Nissan has committed itself to electrification.

Last year, the automaker outlined plans to launch eight new EVs to hit annual sales of 1 million electrified vehicles by 2022. The Nissan Maxima large sedan, for instance, could return as an EV, inspired by the IMs "elevated sports sedan" concept shown at the 2019 Detroit auto show.

"In its financial state, Nissan cannot afford to keep all these current models and add the electric ones, too," Kim said.

But dealer Wright warns against eliminating nameplates, as it could send business to rivals. Since Nissan discontinued retail sales of the Quest minivan in 2016, Wright said he lost repeat business to Honda.

He said, "My biggest conquest loss is Honda Odyssey."