Trump's Tariffs Have Sparked a Surge in Nissan's Production Strategy in the US | Carscoops

      Nissan is worried about the future of vehicles priced under $30,000 that are manufactured abroad and brought into the US.

      The company’s American factory produced only 314,500 vehicles last year, despite having the capacity for 640,000 units.

      Increasing tariffs may make low-cost imports unviable, forcing Nissan to raise domestic production. Shifting the production of the Versa to the US may encounter difficulties due to essential components sourced from Mexico.

      As trade tensions affect the automotive sector, Nissan is intensifying its US vehicle manufacturing to mitigate the impacts of tariffs. Although the automaker is making quick adjustments, it is still apprehensive that rising costs could elevate new car prices, thus jeopardizing the affordability of certain market sectors. Christian Meunier, chairman of Nissan Americas, indicated that some low-cost models that many consumers depend on could entirely disappear.

      The Japanese manufacturer has been facing challenges in the US market and is pushed to increase local output as part of a comprehensive recovery strategy. Meunier noted that the tariffs have essentially expedited Nissan’s initiatives to enhance domestic investments, including expanding operations at its significant facility in Smyrna, Tennessee, which plays a crucial role in its US production strategy.

      The Smyrna plant has the capability to produce 640,000 vehicles per year across three shifts. However, in 2024, it was operating with only two shifts and produced just over 314,500 vehicles.

      “We have large facilities and substantial capacities, but we aren't operating at maximum capacity. There is still room for improvement,” Meunier mentioned in an interview with CNBC. “We’re aiming to sell more US-made products while adjusting the vehicles coming from Mexico and Japan.”

      Meunier emphasized that his primary objective is to “fully utilize the plant and generate significant profit again.” He did not specify when Nissan might be able to ramp up production at the facility, though he mentioned plans to introduce at least one new model, with the possibility of adding a second in the future. Additional hybrid production may also be considered for the site.

      Big Production Plans

      “The positive aspect is that we have flexibility,” he stated. “We are capable of accelerating and performing tasks more swiftly than we usually would. I was already pursuing this before the tariffs, as I believe localization is essential.”

      In a discussion with Reuters, Meunier raised concerns about the tariffs' significant impact on lower-cost vehicles. He pointed out that many of the cars sold in the US for under $30,000 are manufactured overseas and will face the full burden of tariffs. Analysts from Cox Automotive predict that retail prices could rise by 10 to 15 percent.

      “With the tariffs being implemented, it’s going to be extremely challenging,” Meunier noted. “There’s a risk that these affordable segments may vanish.”

      Limited Options for Lower-Priced Models

      One possible solution for Nissan would involve relocating production of some budget-friendly models, like the Versa, from Mexico to the US. However, Meunier warned that this approach has its own challenges, especially if crucial parts cannot be imported from Mexico.