Core Viewpoint - Nissan is undergoing a significant restructuring by closing two domestic factories, aiming to improve operational efficiency and return to growth amidst declining sales and overcapacity [1][2]. Group 1: Factory Closures - Nissan announced the closure of the Zama plant by the end of the 2027 fiscal year, with production shifting to the Kyushu plant in Fukuoka [1]. - The Shonan plant will cease operations by the end of the 2026 fiscal year, marking the first major capacity reduction in Japan since the closure of the Murayama plant in 2001 [1][2]. - Out of five domestic factories, two will be closed while the remaining will continue operations [1]. Group 2: Impact on Workforce and Production - The Zama plant employs approximately 2,400 workers, who will continue working until the end of the 2027 fiscal year [2]. - The current operating rate of Nissan's domestic factories is around 60%, and the closures are expected to increase this rate to 100% and reduce production costs in Japan by 15% [2]. Group 3: Future Plans for Closed Facilities - Discussions are ongoing regarding the future use of the Zama plant, with potential sale negotiations with multiple partners, including Foxconn [2]. - The Zama plant currently produces the "Note" and "Note Aura" models, with plans to transfer the production of the upcoming SUV model "Kicks" to Kyushu [2]. - The Shonan plant is also exploring auxiliary business opportunities, prioritizing employment and considering various possibilities [2].

Investment Rating - The report maintains an "Underperform" rating for Nissan Motor Co Ltd with a price target of ¥250.00 [1][7][39] Core Insights - Nissan's Q1 profits may appear better than guidance, but the path to a turnaround is expected to be challenging due to structural headwinds and the impact of US tariffs [1][10][14] - The company has lowered its operating profit forecast for FY3/26 to JPY -160 billion, reflecting a more conservative perspective on the impact of US tariffs [2][13] - The Re:Nissan recovery plan aims to achieve positive operating profit and free cash flow by FY3/27 through cost reductions and refining market strategies [12][39] Financial Performance - For FY3/25, Nissan reported sales of JPY 12,633 billion, operating profit of JPY 70 billion, and a net profit of JPY -671 billion, with operating profit falling short of guidance by 18% [11] - The forecast for global retail volume in FY3/26 is 3.161 million units, a decrease of 5.5% year-over-year, with a significant impact expected from US import tariffs [2][13] - The company anticipates an operating loss of JPY -200 billion for Q1, attributed to reduced shipment volumes and increased unprofitable fleet sales [3][14] Strategic Initiatives - The Re:Nissan plan includes reducing variable and fixed costs by JPY 250 billion each by FY3/27, consolidating vehicle plants, and reducing the workforce by 20,000 employees by FY3/28 [12][39] - Nissan aims to redefine its market and product strategy, focusing on key markets and models, while reinforcing partnerships with Renault and MMC [12][39] Market Context - Nissan has faced a 40% drop in global sales volume over the past five years due to intensified competition in core markets [17][18] - The company continues to lose market share in the US, China, and ASEAN regions, indicating a structural issue that needs addressing [20][22][24]

Core Viewpoint - The imposition of 25% tariffs on imported cars and parts by the U.S. government is expected to disrupt the supply chain, increase vehicle costs, and challenge affordability, potentially leading to decreased demand in the automotive market [1][6][7]. Group 1: Market Performance - In Q1 2025, U.S. vehicle deliveries were strong, driven by consumers purchasing vehicles ahead of anticipated price increases due to tariffs, with March's seasonally adjusted annual rate estimated at 15.9 million units, a 0.2 million increase from the previous year [2]. - General Motors (GM) sold 693,363 units in Q1 2025, marking a 17% year-over-year increase, with significant gains across its brands and a 94% rise in electric vehicle sales to 31,887 units, making GM the second-largest EV seller in the U.S. [3]. - Toyota, Honda, and Nissan reported modest sales increases of 1%, 5.3%, and 5.7%, respectively, with Toyota's electrified vehicles accounting for 50.6% of total sales [4]. Group 2: Competitive Landscape - Ford's sales declined by 1.3% in Q1 2025 to 501,291 units, attributed to rental fleet sales timing and model discontinuations, although retail sales grew by 5% [5]. - All major automakers, including GM, Toyota, Honda, and Nissan, hold a Zacks Rank of 3 (Hold), while Ford has a Zacks Rank of 5 (Strong Sell) [5]. Group 3: Future Outlook - The automotive industry faces uncertainty due to tariffs, with new vehicle prices nearing $48,000, and potential price hikes could further strain consumer affordability [6][7]. - S&P Global Mobility forecasts U.S. vehicle sales may decline to 14.5–15 million units in 2025 if tariffs persist, down from 16 million in 2024, due to economic uncertainty and inflation concerns [8].