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Nissan (NSANY) to Pull the Plug on Sedan Development in Home Market

By Zacks Investment ResearchStock MarketsJun 14, 2021 05:24AM ET
Nissan (NSANY) to Pull the Plug on Sedan Development in Home Market
By Zacks Investment Research   |  Jun 14, 2021 05:24AM ET
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Per Nikkei Asia, Nissan (OTC:NSANY) Motor Co. NSANY will discontinue the development of new versions of all its sedans in Japan and focus on building sports utility vehicles (SUVs) and electric vehicles (EVs) for its home market. Nonetheless, the Japanese auto giant will continue developing sedans for foreign markets.

Nikkei Asia claims to have sourced this information from major suppliers, who were informed of Nissan's plans. However, Nissan has failed to issue any comments on this matter.

This decision will affect the production of all four sedan models sold in Japan. These models include the Sylphy (the previous-generation Sentra), Fuga (formerly the Infiniti Q70), Cima (formerly the Infiniti Q70L Hybrid), and the Skyline (currently sold as the 2021 Infiniti Q50 in the United States). Per MarkLines, Nissan retailed 5,800 of the four sedan models in 2020, accounting for a mere 1% of its new-vehicle sales.

Skyline, which was launched in 1957, is Nissan’s oldest nameplate in production with a massive fan following. The model once showcased the company’s success with sedans. The latest rumor, if true, would see the legendary brand fade off. Nonetheless, given the brand’s huge customer appeal, Nissan will likely consider using the Skyline name for its SUVs and EVs.

The long-running Skyline and other luxury sedans are built at the automaker's Tochigi plant in Japan. Nissan intends to begin the assembly of its new Ariya all-electric SUV there later this year and might eventually commit the factory solely to EVs.

SUVs outsold sedans for the first time in 2015, amid shifting consumer preference for size, safety and convenience. Per IHS Markit, SUVs made up 47.4% of the U.S. sales in 2019, with sedans accounting for only 22.1%. In fact, by 2025, it is predicted that the light-truck segment, including SUVs, vans and pick-ups, will make up 78% of sales.

In line with this global trend, a number of automakers like Ford F and General Motors GM are ridding their line-ups of sedans and channeling investments to SUVs and crossovers, not to mention EVs and self-driving tech.

Amid the plummeting sedan sales, it is logical to terminate sedans from its production pipeline for Nissan. In fact, the move would enable the automaker to work intimately with its alliance members, Renault (PA:RENA) RNLSY (OTC:RNLSY) and Mitsubishi Motors (OTC:MMTOF), and divert the company’s investments toward renowned SUVs and EV models.

The latest news is exclusive to the Japanese market, hence the company’s sedans sold in the United States like the Altima, Maxima, Sentra, and Versa will not get affected. Nissan sedans have, in fact, performed superiorly overseas than the domestic market, with approximately 950,000 units sold in major markets abroad in 2020.

Further, the latest news to halt sedan development is in line with Nissan’s vision to trim its model count by roughly a fifth by the fiscal year ending March 2024.

Currently Nissan carries a Zacks Rank of 4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of the company have appreciated 31.4% in the past year compared with the industry’s rise of 52.6%.

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Nissan (NSANY) to Pull the Plug on Sedan Development in Home Market

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Nissan (NSANY) to Pull the Plug on Sedan Development in Home Market

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