Nissan to close Changzhou car plant in China

Japanese automaker Nissan closed its car manufacturing plant in Changzhou, Jiangsu Province last Friday. The plant was put into operation four years ago and produces 130,000 cars a year. Nissan's joint venture in China, Dongfeng Nissan, said that it would optimize and adjust its production capacity and freedom based on changes in the overall strategy and business environment.

According to the Japanese newspaper Jidosha Shimbun on the 24th, Nissan announced on June 21 that it had closed its plant in Changzhou, Jiangsu, China to optimize operations. This is the first time Nissan has closed a passenger car plant in China. The rapid popularity of electric vehicles in China has accelerated the severe decline in sales of Japanese automakers, which are known for their strong fuel vehicle strength. This is the latest in a series of setbacks suffered by Japanese automakers in an increasingly competitive market.

Nissan's Changzhou plant is the smallest of Nissan's eight plants in China, but it has the most advanced plant and started production in November 2020. The annual production capacity is about 130,000 vehicles, accounting for about 10% of Nissan's production capacity in China. When introducing the company's new business plan a few months ago, Nissan CEO Makoto Uchida revealed that the sales price in the Chinese market fell two years earlier than expected.

The factory closed after less than four years of operation

In recent years, the output of Chinese car companies has swept the entire electric vehicle market. In an interview with Radio Free Asia on Monday, Mr. Shi, a businessman in Changzhou, Jiangsu, said that there are many reasons for the closure of Nissan Changzhou, which has been settled in the local area for less than four years. But the most common reason is political. He said: "Because China's environment is affected by political factors. China's political environment is getting worse and worse, and the economic environment is getting worse and worse. Maybe one day there will be an emergency, and you can't escape even if you want to. In addition, private property is not protected in China. If you continue to do business here, you may suffer great losses."

According to the first financial website, Nissan Motor's joint venture in China, Dongfeng Nissan, said that based on changes in the overall strategy and business environment, Dongfeng Nissan will optimize and adjust its internal production capacity and resources to better adapt to the company's transformation and development. Dongfeng Nissan will increase the production line layout and investment in new energy vehicles while ensuring the production capacity of existing fuel vehicles to better meet user needs.

According to the Nikkei, Nissan's investment in the Changzhou plant was originally intended to further expand sales. At the time, China was still the country with the largest sales of new cars for Nissan, surpassing the United States, and was the main pillar of the company's operations. Today, the closure of the Changzhou plant highlights the difficulties of Nissan's operations in China.

Nissan's new car sales fell 16% year-on-year

According to statistics, in 2023, Nissan's new car sales in China fell 16.1% from the previous year, marking the fifth consecutive year of year-on-year sales declines. This downward trend continued this year, with sales from January to May 2024 down 1.0% year-on-year. Other Japanese automakers are also facing challenges in the Chinese market. Toyota's sales from January to May this year fell 10% year-on-year to 630,000 vehicles, and Honda's sales also fell 17% to 340,000 vehicles, and they are struggling.

Mr. Shi said that it is not just the automotive industry. Foreign companies in China are planning when to withdraw from China: "Companies doing business in China have reached a basic consensus to leave this troubled place as soon as possible. For example, Apple, Panasonic, Foxconn and other companies that should leave have basically left."

In addition to Changzhou, Nissan has also established joint venture factories in Dalian, Wuhan, Guangzhou, etc. The parent company of Changzhou Factory, Zhengzhou Nissan Automobile Co., Ltd., was established in March 1993. It is the first complete vehicle joint venture between Nissan Motor Company and Dongfeng Motor Group in mainland China.

Mr. Zhang, a Chinese manufacturing industry insider, told our station that the current economic situation is bad and the government's fiscal revenue has dropped significantly. The authorities are using their power to solve fiscal shortages that cannot be solved by law: "They can use their power to seize all the means of production. The transformation of state-owned enterprises into private joint-stock enterprises was to absorb private capital. For example, many joint ventures, such as Hitachi Group and Fujian, jointly established Fujitsu Group. In the end, Hitachi lost money and split up with Fujian. Hitachi moved to Singapore to establish Hitachi Asia Limited."

In addition to foreign-funded enterprises, Chinese private enterprises face the same fate as foreign enterprises. As local governments deepen their 30-year tax investigation of private enterprises, some noodle shops and small restaurants have also been checked by the authorities for their account books over the past few years. It is reported online that the Shenzhen State Taxation Bureau issued a "Notice of Retrieving Account Book Information" to Master Liu's Private Beef Noodle Restaurant in Shiyan Street, Baoan District, Shenzhen, to check the account books from January 1, 2021 to December 31, 2023.