Nissan Motor Co. will shutter its Wuhan plant by March 2026, grappling with low output, fierce competition from Chinese EV makers, and a projected ¥750 billion ($5bn) loss. This retreat underscores the challenges facing foreign automakers in China.
”The Wuhan plant’s underperformance reflects a mismatch between Nissan’s offerings and China’s demand for affordable, tech-laden EVs”
Nissan Motor Co., once a formidable player in China’s automotive market, is beating a retreat. The Japanese automaker will cease vehicle production at its Wuhan plant by 31 March 2026, a decision driven by persistently low output and unrelenting competition from domestic electric vehicle (EV) manufacturers. The Wuhan facility, leased from Dongfeng Motor and operational since 2022, boasts a capacity of 300,000 vehicles annually but has limped along at a mere 10,000 units per year.
Nissan’s ’strategic’ retreat from China’s automotive battlefield?
This closure follows the shuttering of Nissan’s Changzhou plant in Jiangsu Province in June 2024, marking a significant contraction of its manufacturing footprint in China.
The Wuhan plant, which produces the Ariya electric vehicle and the X-Trail SUV, has struggled to find its footing in a market increasingly dominated by local giants like BYD and Geely. “The plant, leased from Dongfeng Motor, currently manufactures the Ariya electric vehicle and the X-Trail SUV,” notes Reuters, highlighting its underutilisation. China’s automotive landscape has shifted dramatically, with domestic brands capturing consumer loyalty through aggressive pricing and rapid innovation in EVs. Nissan’s inability to keep pace has left it exposed.
Financially, the company is reeling. Nissan forecasts a record net loss of ¥700 billion to ¥750 billion (approximately $4.9 billion to $5.3 billion, based on a 1 May 2025 exchange rate of ¥1 = $0.007) for the financial year ending 31 March 2025.
“This move follows Nissan’s recent forecast of a record net loss ranging from ¥700 billion to ¥750 billion (approximately $4.9 billion to $5.3 billion) for the financial year ending 31 March 2025,” reports The Economic Times. The projected deficit stems from impairment charges, restructuring costs, and sluggish sales in key markets. In February 2025, Nissan’s global production fell 12.1% year-on-year to 237,982 vehicles, with China registering a precipitous 35.6% decline, producing just 24,890 units.
”Supply chains must adapt to reduced production volumes, while export strategies demand new routing and compliance frameworks to circumvent tariffs”
Nissan pivots to exports as China EV sales slump, but tariffs bite
The broader context is unforgiving. China’s EV market, the world’s largest, is a crucible of competition. Local manufacturers benefit from government subsidies, robust supply chains, and a deep understanding of consumer preferences. Foreign automakers, including Nissan, face not only market headwinds but also logistical challenges. The Wuhan plant’s underperformance reflects a mismatch between Nissan’s offerings and China’s demand for affordable, tech-laden EVs. “Nissan’s challenges in China are not isolated to the Wuhan plant,” observes Reuters, pointing to the Changzhou closure as part of a pattern.
Nissan’s response includes a pivot to exports. The company aims to ship 100,000 China-made vehicles annually to offset declining domestic sales. Yet this strategy faces hurdles. High tariffs in the US and Europe, key export markets, threaten profitability. The US is imposing tariffs of up to 145% on Chinese imports, while the European Union has introduced duties of up to 38.1% on Chinese EVs, citing unfair subsidies. These barriers could erode Nissan’s margins, forcing a delicate balancing act between cost and competitiveness.
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The carmaker’s Wuhan exit signals strategic shift as logistics brace for fallout
The retreat from Wuhan is not merely a cost-cutting measure but a recalibration of Nissan’s global strategy. China, once a growth engine, now represents a cautionary tale for foreign automakers. Volkswagen and Stellantis have also scaled back operations, ceding ground to local players.
Nissan’s leadership, under chief executive Makoto Uchida, must navigate this turbulent landscape while addressing investor concerns about the company’s financial health. Uchida has pledged to streamline operations and bolster EV development, but the road ahead is fraught. For automotive logistics, Nissan’s withdrawal underscores the volatility of China’s market. Supply chains must adapt to reduced production volumes, while export strategies demand new routing and compliance frameworks to circumvent tariffs.
The closure will ripple through Dongfeng Motor’s network, potentially affecting suppliers and labour markets in Wuhan. Meanwhile, Nissan’s pivot to exports could strain port capacities and shipping logistics, particularly if trade tensions escalate. The Wuhan shutdown is a microcosm of broader industry trends. As China’s EV sector consolidates, foreign players must innovate or retreat.
Nissan, for now, has chosen the latter, betting on a leaner footprint to weather the storm. Whether this gamble pays off will depend on its ability to regain competitive edge in a market that waits for no one.
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