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Nissan Announces Gradual Removal of Diesel Cars From Europe

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Per Reuters, Nissan Motor Company (NSANY - Free Report) announced plan to gradually discontinue selling diesel passenger cars in Europe. Declining demand by customers, due to restrictions on diesel-enabled vehicles in many countries, has forced the company to take this decision. Further, rising focus on electrified options has also added to the decision.

Last month, Nissan announced to lay off employees at its Sunderland plant due to diminishing demand for diesel cars. Earlier in March, Toyota Motor Corporation (TM - Free Report) announced its decision to discontinue selling diesel passenger cars in Europe. Diesel cars account for less than 10% of the company’s total passenger car sales in the region. Per European Automobile Manufacturers’ Association, Nissan and Toyota have a market share of 8.6% in Europe during first-quarter 2018.

Demand for diesel-engine cars slumped after Volkswagen was caught in the diesel-emission scandal in 2015. The company had to shell out roughly $30 billion in fines and other costs. Moreover, the company is still under the process of recovery. After that incident, the automotive industry is witnessing a decline in diesel-car sales. Further, tougher emission standards on carbon dioxide, anticipated to come in by 2020, have increased the speed to roll out plug-in and electric vehicles.

Nissan Motor Co. Price and Consensus

 

Per Nissan’s management, it anticipates a progressive decline in diesel-vehicle demand, which is unlikely to occur in the near term. Modern diesel engines are expected to be in demand, which will be available within Nissan's powertrain offering. With the concentrated demand for the diesel ones and its electrification push will allow the company to phase out diesel passenger cars gradually.

Price Performance

In the last six months, Nissan’s stock has gained 7.8%, outperforming 1% rise of the industry it belongs to.

Zacks Rank & Stocks to Consider

Both Nissan and Toyota carry a Zacks Rank #4 (Sell). A few better-ranked stocks in the auto space are Allison Transmission Holdings, Inc. (ALSN - Free Report) and Oshkosh Corporation (OSK - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has expected long-term growth rate of 10%. Shares of the company have gained 8.8% in the past year.

Oshkosh has expected long-term growth rate of 18.3%. In a year’s time, shares of the company have gained 9.4%.

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