Nissan’s operations in Mexico Face Challenges

Nissan plans to move forward with its restructuring plan after negotiations to merge with Honda failed, only now the program will be executed in an expedited manner.

Although this strategy includes cuts in both leadership and manufacturing at a global level, the company has not yet made a final decision regarding its operations in Mexico, where it obtained its best production results at a global level.

In a press conference from its headquarters in Yokohama, Japan, CEO Makoto Uchida said that the plan to cut 9,000 jobs globally will begin with the 2025 fiscal year, that is, next April 1.

Most of these cuts, 6,500 jobs, will come from the manufacturing area, both assembly and engine plants.

In a first phase, 5,300 positions will be eliminated during the year in question, while an additional 1,200 employees will be laid off in fiscal year 2026, which begins on April 1, 2026.

The remaining 2,500 jobs will be “indirect cuts”. That is, job reductions through the implementation of leaner operations and a reduction in the pace of recruiting, as well as an acceleration of retirement and voluntary separation programs.

Such measures will lead to a 20% capacity reduction, from five million vehicles to four million annually, by fiscal 2026, of which half a million will be cut in China and another half a million in the rest of the world.

This will involve the closure of three production sites of which the only one confirmed so far is one of its two plants in Thailand.

Of the other two yet to be identified, one will close in the third quarter of fiscal 2025, i.e. between October and December of this year, while the other will be shut down in fiscal 2026.

These closures are in addition to the eliminations of production shifts that the company had already announced in Smyrna, Tennessee and Canton, Mississippi.

Regarding operations in Mexico, Uchida said that close to 300,000 units of both Nissan and Infiniti were exported to the United States from Aguascalientes, and that if the tariffs go into effect, some of these models could be manufactured in Japan.

However, he warned that despite these measures, the impact of the tariffs on finances will be unavoidable, so alternatives are still being analyzed.

Nissan produced 669,941 vehicles in Mexico last year, not only the highest number among its global operations, even above China and Japan, but also the only region where the company reported an increase with respect to 2023.

Of these units, the Japanese automaker exported 456,866 units, which means that one third of the shipments had a destination other than Mexico's main trading partner.

However, Nissan does have underutilized production capacity in Mexico at the COMPAS plant that it operates jointly with Mercedes-Benz.

In fact, the company has already announced that the model it assembles there will be discontinued at the end of this year, which makes this manufacturing center a strong candidate for closure.