Overexpanded Nissan May Run Into Trouble

Despite Toyota’s high-profile decision to close an American auto plant and to delay the opening of another due to tepid auto sales, smaller competitor Nissan has decided that it has no plans to reduce its manufacturing capacity in the United States. However, analysts have expressed their concern that Nissan’s decision to maintain its American production capacity could end up harming the company.

Currently, Nissan can produce 950,000 vehicles in the United States, but weak demand for its cars has led Nissan to only produce 360,000 vehicles in the same period. This means that Nissan has slowed its U.S. plants to 44 percent of their available production speed. Nissan has not commented on these numbers, but analysts have pointed out that Nissan expanded too quickly for demand that never came.

CEO Carlos Ghosn attempted to vigorously expand his company when times were good for the auto company, expanded the number of models offered by Nissan and opening a second U.S. plant in Canton, Mississippi. However, analysts point to Nissan’s attempts to grab market share that is firmly held by its Detroit rivals, such as vans and pickup trucks, as one of its main downfalls.

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