Nissan alters U.S. factory plans to gain efficiencies

As it strives to shore up U.S. profit margins, Nissan is studying a plan to move products around at its factories in Tennessee and Mississippi, starting with the consolidation of crossovers at its assembly plant in Smyrna, Tenn., according to its North American suppliers.

This summer, the automaker plans to pull production of its Murano midsize crossover out of Canton, Miss., and move assembly to Smyrna, according to a presentation shared with suppliers and obtained by Automotive News.

But Nissan's resolve to make itself more efficient is being hampered by the forced industry shutdown because of the health crisis.

The full plan also includes consolidating the production of Altima midsize sedans — currently built at both locations — to only the Canton plant. But suppliers were told this month the Altima part of the plan is on hold, a casualty of planning disruption from the coronavirus pandemic.

A spokeswoman for Nissan North America declined to comment on details of the presentation and added, "We have made no external announcements about changes to our production plans in North America. Nissan regularly studies a number of potential opportunities to optimize manufacturing operations."

Nissan introduced the Japan-built Murano in 2002 but established Canton as its North American production base in 2014.

Shifting Murano production to Smyrna would free up factory capacity at the 4.7 million-square-foot Canton plant for new investment. Nissan has a history of investing in the U.S. when the market is down, starting with its venture to enter U.S. automaking during the economic turbulence of 1981.

In the aftermath of the 2009 economic crisis, Nissan announced a $1.7 billion investment to build the electric Leaf sedan and its battery module at the Smyrna plant. Nissan made another big bet in 2011, shifting production of the Rogue crossover from Japan to Smyrna in an effort to cut its exposure to the high Japanese yen.

Sam Fiorani, vice president at AutoForecast Solutions, believes relocating the Murano to Smyrna is a good move to improve efficiency. The 6 million-square-foot Smyrna plant also builds the Rogue, Pathfinder and Infiniti QX60 crossovers.

"Consolidating the Murano into the same plant with the Pathfinder lowers the costs of these two popular crossovers by increasing the volume of common parts, especially the shared V-6 engine and continuously variable transmission," Fiorani said. At the same time, removing Murano production from Canton reduces complexity at that factory, which assembles a mix of body-on-frame trucks, unibody cars and crossovers. Nissan builds the Altima, Murano, Frontier and Titan pickups, and NV cargo and passenger vans in Mississippi.

One supplier who asked not to be identified said Nissan delayed the shift of Altimas from Tennessee to Mississippi because Nissan needs Altima production there for a while.

Smyrna is winding down the current-generation Rogue, leaving a lull in production volumes until the next Rogue arrives. First-quarter Rogue sales were down 36 percent from a year ago.

"Nissan has decided Rogue volume in Smyrna has to reduce, so that means Altima will not shift 100 percent to Canton," the supplier told Automotive News. "Nissan is focused on keeping Smyrna full and scaling down production at Canton."

The Rogue is to be redesigned this year for the first time since 2013. But the timing of that critical launch has been complicated, like much of the industry these days, by the pandemic. Nissan's U.S. plants shut down March 20; a mid-May reopening has been proposed.

The U.S. product shuffle comes as Nissan adjusts to declining worldwide demand for its products. Nissan Motor Co. is expected to lower its annual sales target by 1 million, Reuters reported this month. Such a reduction would equate to closing three to four assembly plants.

U.S. market share for the Nissan Division dropped to 6.6 percent through the first quarter of 2020, its lowest level since 2008, compared with 9.1 percent through first-quarter 2018, according to the Automotive News Data Center. The decline was partly a result of a strategic decision to cut back on its sales to rental fleet customers.

Nissan Division's 2019 U.S. vehicle production was down 8.5 percent from the year-ago period, marking its lowest volume since 2013.

More action is on the way. Nissan is expected to unveil a global recovery plan next month that could involve dropping certain products or regional businesses and leaning more on Nissan's partners.

The Murano is Nissan's fifth-highest-selling nameplate in the U.S. Deliveries of the midsize crossover soared 34 percent in the first quarter, making it Nissan's fastest-growing model in the first three months 2020.