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Report: Nissan to cut North America output by up to 20%

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Report: Nissan to cut North America output by up to 20%

Nissan Motor Co. Ltd. will cut production in North America by up to 20% amid falling demand in the U.S., the Nikkei Asian Review reported May 29, without citing sources.

Production cuts are underway in five assembly plants, two in the U.S. and three in Mexico, but no production line will be completely terminated, the Nikkei said.

No layoffs are planned but workers will work "two or so" fewer days a week. Output is expected to slow output by roughly 10% to 20% on the year by summer, with the cutbacks expected to conclude by autumn. Parts suppliers have been notified of the plan, which will likely dampen their profits temporarily, the Nikkei added.

The cuts are projected to lower U.S. sales by 3% to 1.55 million units in the current fiscal year. U.S. sales for the year ended March 31 accounted for 28% of the car maker's global sales of 5.77 million units. In April, U.S. sales plunged 28.1% from a year ago.

Nissan has so far aimed to increase its U.S. market share through high-volume, low-margin sales to rental car companies, along with generous sales incentives.

However, the Japanese carmaker, which holds the sixth-largest U.S. market share, will look to reduce both its corporate sales volume and incentives starting in the current fiscal year as it shifts the focus on profits, according to the report. The company's output in the U.S. has fallen for 10 straight months as of March, and it likely contracted in April too, Bloomberg News reported. The carmaker is due to report its production data this week.

The cuts come as U.S. auto sales from all car manufacturers have declined 1.8% to 17.55 million units, the Nikkei said, citing Japanese market intelligence firm Fourin. This has prompted Ford Motor Co. to phase out traditional sedans in favor of trucks and the Mustang sports car, and Honda Motor Co. Ltd. is cutting output of its Accord model.

The U.S. has launched an investigation into auto imports, potentially leading to tariffs on well-known brands.