Founder: Turnaround Talk
A surefire way to place financial pressure on a company is to remove a popular product from the market without any replacement.
This is the case with Nissan who announced in 2023 that the company would not be producing its iconic NP200 – the only half-ton bakkie available in South Africa – when its product lifecycle ends in March 2024.
The company is now facing a race against time to find a replacement for this popular vehicle. Failing this, the company will undoubtedly lose some ground to its competitors.
Retrenchments
The Moneyweb article points out that Nissan South Africa plans to retrench 25% of its employees – about 400 of its total 1 600 workforce – as part of an employee reduction plan because of its inability to secure a replacement model for its NP200 bakkie for production at its Rosslyn plant in Pretoria.
Production of the Nissan NP200 bakkie is scheduled to end in March 2024 at the end of the model’s extended lifecycle.
Nissan SA announced on Friday that its Rosslyn plant continues to build its flagship Navara pickup, with model upgrades to come and export destinations set to increase, but is preparing to end production of the iconic NP200.
The article points out that the immediate replacement model for the NP200 was planned to be built on an alliance-shared platform in Russia, but the geopolitical situation in Russia meant this model was no longer viable due to significantly reduced volumes.
The alliance is a reference to the Renault-Nissan-Mitsubishi Alliance, while the geopolitical situation in Russia appears to be a reference to Russia’s 2022 invasion of Ukraine and the subsequent war between the two countries, which has resulted in a large number of countries imposing sanctions on Russia.
Image By: Nissan South Africa
Consultation phase
The Moneyweb article points out that Nissan SA confirmed it has now entered into a formal consultation phase to restructure the business.
It said this “could result in a reduction in the number of employees across the company”.
“During the consultation phase, we will work with our employees, their representatives, and our partners to minimise the impact on our people and investigate other opportunities for them and for the business to ensure a sustainable future for the brand in South Africa,” it said.
The article adds that Nissan SA spokesperson Mamokhele Sebatane confirmed to Moneyweb that the company employs about 1 600 individuals and expects about 400 staff to be affected by the employee reduction plan.
However, Sebatane stressed that “we cannot and should not preempt the result of the consultation process”.
“Our focus at this time will be on minimising the impact on employees while taking responsible action needed to safeguard the long-term sustainability of the business,” she said.
The article points out that Sebatane was guarded in her comments on when it is anticipated that affected employees will leave the employ of Nissan SA.
“We cannot and should not preempt the result of the consultation process for affected employees,” she said.
“Between the conclusion of consultation proceedings and the end of production, Nissan will implement a phased approach for those leaving the employ of the company. Our focus at this time will be on minimising the impact on employees,” said Sebatane.
The article adds that comment about the planned retrenchment was requested from the National Union of Metalworkers of South Africa (Numsa), but a response has not yet been received.
Production figures
The article points out that Sebatane confirmed that Nissan SA expects the Rosslyn plant to produce 14 083 NP200 units in its 2023 financial year but did not provide any production figures for the Navara.
Image By: Renault South Africa
“From a broader sense of production, Nissan is on track to meet the forecasted production volumes at the plant in 2023 – as we continue to leverage our operations in Rosslyn as an LCV [light commercial vehicle] hub and gateway into Africa in relation to Nissan’s Africa Mid-Term Plan,” she said.
The article adds that Sebatane did not provide any details of projected production volumes by the Rosslyn plant in 2024, merely stating: “We are confident that Nissan will continue adding value to the South African economy in 2024.”
A reliable, economical workhorse
The NP200 proved popular with tradespeople (particularly plumbers and electricians) because of its size and fuel economy.
Noting Nissan’s decision and the potential of dialling into an untapped market where demand will remain the same, Renault, Suzuki, and other manufacturers are lining up to produce smaller bakkies.
This will serve them well while Nissan decides on a replacement vehicle. But how much ground will be lost? Not a lot. The advantage that Nissan has over its competitors is its turnaround time when it comes to repairs. Renault is notorious for unavailability regarding parts, and with the supply chain crisis still hanging around, this could be a deal breaker.
How will the prolonged NP200 replacement impact the company in the future?
