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Nissan plans to cut production capacity at Japanese factories by 78 percent in May to cope with the plight of the epidemic as consumer demand shrinks due to the impact of the new crown pneumonia epidemic, Reuters reported.

Nissan plans to limit production at its Japanese plants to 13,400 vehicles in May, compared with 61,000 in May last year, according to information obtained by Reuters. Production cuts will continue through June, when Nissan's production will fall to 33,700 vehicles, down 43 percent from the previously planned 59,300.

Nissan said on April 21 that it would close its headquarters in Yokohama and its main research and development center near Matsuki City, Kanagawa Prefecture, and that production plants would only be operational for a few days. Yokohama headquarters and R & D center has 15,000 employees, will be on vacation from April 25 to May 10, due to the Golden Week holiday connecting Japan, so the vacation will last for 16 days.

Production at Nissan's Tochigi plant was halted for most of April and is scheduled to continue through most of May. The plant mainly produces Skyline sedans and Infiniti models. In addition, the plant in Kyushu, southern Japan, operates only day shifts in April and May, and completely shuts down for four days during this period.

Sales of many car companies have fallen sharply after home quarantine orders were imposed in several countries to curb the spread of the epidemic. As the epidemic eased around the world, many car companies announced the resumption of factory work, but for Nissan, Nissan's profitability deteriorated after former chairman Carlos Ghosn was ousted. Nissan's net profit for the first three quarters was about Rmb2.59 billion, down 87.6% year-on-year, according to its 2019 earnings report. The net loss for the third quarter was about 1.7 billion yuan, the worst quarterly financial report in a decade.

After two years of declining sales, falling profit margins and depleted cash reserves, the epidemic has made Nissan's business even more difficult. Nissan executives said management had agreed that Nissan needed to scale back and that its latest recovery plan, announced next month, could cut annual sales targets by 1 million vehicles. It is understood that Renault Group, Nissan Motor and Mitsubishi Motors will announce their medium-term strategic plans at the same time next month, reaffirming the importance of alliances in their respective strategies and competitiveness enhancement, helping the three companies to achieve effective improvement in competitiveness and performance.

Alliance partner Mitsubishi Motors has taken similar measures as a result of the epidemic, with plans to cut domestic production by a third over the next two months, cut performance targets for fiscal year 2019 (April 2019-March 2020) and cut compensation for senior executives by nearly half in response to the impact of falling sales caused by the New Crown Pneumonia epidemic. Toyota Motor Co., another Japanese automaker, also plans to cut production capacity at its Japanese factories by 50% in May and 40% in June, a measure that will affect Toyota's 18 factories and dozens of suppliers in Japan.

Nissan's global sales in 2019 were 5176189 vehicles, down 8.4% year-on-year. China and the United States are Nissan's two largest auto markets. Affected by the epidemic, Nissan's sales in the United States fell 30% year-on-year in the first quarter and 39.9% year-on-year to 206,600 vehicles in China. At present, Nissan's business in China has returned to normal. All business divisions and subordinate factories in Guangzhou, Zhengzhou, Dalian, Xiangyang and Shiyan resumed work on February 17 for the sixth time, and Wuhan headquarters of Dongfeng Motor Co., Ltd., a joint venture company of Nissan Motor in China, officially resumed work on March 30. By the end of March, except for a few cities in Hubei Province and Wuhan, more than 90% of dealers and suppliers of Nissan, Qichen, Infiniti and Dongfeng brands nationwide had resumed work.

However, based on the impact of the epidemic on the company's operations, Nissan said today it expects an operating loss for the fiscal year ending March 2021, as sales decline accelerates due to the new crown pneumonia epidemic. It expects an operating loss of up to 45 billion yen ($420 million) and a net loss of 95 billion yen for the current fiscal year, compared with an operating profit of 85 billion yen and a net profit of 65 billion yen.

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