Nissan will no longer produce cars in Indonesia in cost-cutting drive

JAKARTA: Nissan will end vehicle manufacturing at its plant in Indonesia in order to rightsize and move towards improved profitability, the chief of its operations in the country said.ax

"Nissan has made the decision to end vehicle manufacturing at the Nissan plant in Indonesia,” Isao Sekiguchi, president of PT Nissan Motor Indonesia said in an e-mailed statement today.

"The end of vehicle production is part of an optimisation plan that includes rightsizing, production optimisation and reorganising of business operations.”

Chief executive officer Makoto Uchida has warned that deeper costs will probably be necessary to turn around the automaker, which has been in turmoil since the 2018 arrest of Carlos Ghosn, the company’s former chairman.

Profits are at decade lows and more than 12,500 jobs are to be cut. A plan to revamp the business is due in May, and the future of the Indonesia operations had long been in question.

Kyodo News reported earlier on the exit, without identifying the source of information.

Last month, Nissan reduced its full-year operating profit forecast to 85 billion yen (US$791 million) from an earlier estimate of 150 billion yen, as the carmaker faces falling sales in the US, Japan, Asia and Europe.

Nissan opened a second factory at Purwakarta, Indonesia, in 2014, for an investment of 33 billion yen. That boosted total production capacity to 260,000 units a year. The plant now produces 3 finished cars: Datsun GO, Datsun GO+, Datsun Cross, although production has been halted since late January.

Mitsubishi Motors Corp., which is in a global carmaking alliance with Nissan, already has a strong presence in South-East Asia. The two Japanese carmakers’ pact also includes Renault SA. Nissan owns about 34% of Mitsubishi, after taking a stake in the company in 2016.

"We will continue to work with our Alliance partners on ensuring manufacturing footprint in Indonesia and further enhance the Nissan brand by bringing in new models,” Sekiguchi said in the statement.