Nissan, a well-known Japanese automaker, has officially announced that it will close its manufacturing plant in Changzhou, Jiangsu Province, China, a decision that marks the factory's fate after less than four years of operation since it opened in 2020.

With the continuous evolution of the global economic pattern and the electric transformation of the automobile industry, the strategic layout of multinational automobile manufacturers is also quietly changing.

Recently, a report from the Japanese economic news has aroused widespread concern in the industry - Nissan, a well-known Japanese automobile manufacturer, officially announced that it will close its manufacturing plant in Changzhou, Jiangsu Province, China, a decision marking the factory since 2020, after less than four years of operation is facing closure.

Nissan, which once crushed Toyota and Honda in sales in China

In 2018, Nissan reached the peak of sales in China, with annual sales of 1,564,000 vehicles, an increase of 2.9%, surpassing Toyota China and Honda China.

In fact, Nissan's Changzhou plant was acquired from Zhengzhou Nissan. Public information shows that in June 2018, Dongfeng Motor Co., Ltd. and the Changzhou Municipal government signed a government cooperation agreement on "Changzhou Base for overall asset restructuring", and then established Dongfeng Motor Co., Ltd. Changzhou Branch, fully acquired the assets and personnel of the original Zhengzhou Nissan Changzhou Branch, and comprehensively transformed the factory, with an annual capacity of 120,000 vehicles at that time.

In 2020, Dongfeng Nissan Changzhou plant was officially put into operation, mainly producing Qashqai SUV models. On November 18, 2020, the factory officially rolled off the production line of the first car.

Qashqai is a compact SUV model owned by Dongfeng Nissan, which is also one of the three best-selling models of the brand. It was launched in March 2008, and the current price range is 1259-174,900 yuan. Retail data show that Qashqai sales in 2022 will be 150,600 units, and in 2023 it will be 113,600 units.

The Nissan brand is currently selling models including Xuan Yi, Teana, Qijun, Qashqai, Tuda, Strength, Loulan and other models, but the sales of Dongfeng Nissan are actually only Xuan Yi and Qashqai models. Taking retail sales in May as an example, the two sold 31,600 and 11,000 units, respectively, and the Teana sold 5,560 units.

If you can't wrap it up, wrap it up

Nissan said that the increasing popularity of pure electric vehicles in the Chinese market and fierce price competition, which makes Japanese manufacturers with fewer pure electric models (EV) face a big challenge in sales. The Changzhou plant was closed "in order to optimize production."

On June 7, Nissan announced sales data in China, showing that in May 2024, sales of passenger cars and light commercial vehicles were 64,233 units, down 2.8% year on year;

Dongfeng Nissan, which includes the Nissan, Kai Chen and Infiniti brands, sold 61,725 units, down 1.7%. Light commercial vehicle business segment (Zhengzhou Nissan) sales of 2,508 units, down 23.1%;

From January to May 2024, the cumulative sales volume of Nissan Motor China, including the two major business segments of passenger cars and light commercial vehicles, was 286,445 units, down 1% year-on-year, and Dongfeng Nissan also fell out of the top 10 manufacturers' sales ranking issued by the Passenger Federation for many times.

Although Nissan has a total production capacity of 1.6 million vehicles in China, and the Changzhou plant has an annual production capacity of about 130,000 vehicles, accounting for 8 percent of its production, the company has had to make tough decisions in the face of market pressures and industry transformation. The Qashqai SUV produced at the plant will be moved to the Dalian plant.

At present, in addition to Changzhou, Nissan has also established joint venture factories in Dalian, Wuhan, Guangzhou and other places. The company is positioned as the main development base of Dongfeng and Nissan dual-brand LCV products, headquartered in Zhengzhou Economic and Technological Development Zone, China.

Employee compensation and placement

Details are not yet fully public, but analysts generally believe that Nissan's Changzhou plant closure is part of its global efforts to optimize resource allocation and focus on electric vehicles and smart mobility technology.

For the thousands of employees at the Changzhou plant, Nissan said it will handle relevant matters in strict accordance with laws and regulations to ensure that employees' rights and interests are properly arranged. At the same time, the company will also explore job transfer opportunities for affected employees in other business areas or factories, reflecting its social responsibility as a multinational company.

According to netizens, regarding the compensation program, it is still in communication, predicting the minimum n+3, because the last restructuring compensation program is greater than n+3, so the internal staff negotiations will not be lower than this program, some want to talk about n+6, n+7, and the recent program will be released.

According to insiders, after the closure of the factory, most of the laid-off personnel will give at least N+1 compensation, but a small number of senior executives will go to other bases or resign directly.

Far-reaching impact on the Chinese market

In recent years, China, as the world's largest automobile market, has given unprecedented support to new energy vehicles, and the market competition environment has become increasingly fierce. According to the China Association of Automobile Manufacturers, Japanese automakers' share of the Chinese market fell from 23.1 percent in 2020 to 12.1 percent between January and May this year, while Chinese brands' share rose from 38.4 percent to 61.3 percent.

Japanese automakers have been affected by sluggish sales, and in addition to Guangqi Honda's voluntary resignation measures, Mitsubishi Motors (Mitsubishi) decided to withdraw from the Chinese market last year. Nissan obviously hopes that through this decision, it will accelerate its pace in the field of new energy and respond to market changes with a more flexible attitude.

Mr. Shohei Yamazaki, Chairman of Nissan China Management Committee and President of Dongfeng Motor Co., LTD., said: "In the first May of this year, the situation in the Chinese market remains complex, and the penetration rate of China's new energy vehicle market has exceeded 50%. In order to better adapt to the rapid changes in the market and consumer demand, Nissan has accelerated the intelligent and electric drive transformation in the Chinese market, and will deliver continuous value to meet diverse user needs with a more balanced product lineup in the future, fulfilling its commitments to Chinese consumers." According to the plan, by the 2026 fiscal year, Nissan will introduce 30 new models, of which 16 are electric vehicles and 14 are internal combustion engine models, and achieve cost parity between electric vehicles and fuel vehicles by 2030.

This move by Nissan not only has a profound impact on its own future development path, but also provides an important observation window for the development trend of China and even the global automobile manufacturing industry. As more traditional automakers accelerate their transition to electrification, similar strategic adjustments for joint venture brands that rely on fuel vehicles for the bulk of their sales may become the norm.

From the analysis of the development trend of the automobile industry, the future market has entered the era of electrification, and the joint venture car companies that are relatively lagging in the progress of electrification transformation are facing no small test. Data show that in May this year, the Japanese brand in the Chinese market share of 14.8%, the German brand fell below 20%, 18.6%, the American brand is 6.7%, the above foreign brands have declined to varying degrees, while the share of independent brands has reached 57.6%, an increase of 7.3%.

Many analysts said that the next three to five years is a watershed for the automotive industry, and most car companies will be eliminated in the knockout tournament.