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Nissan to Lower North American Output, Raise Profitability

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Per Reuters, Nissan Motor Co. (NSANY - Free Report) is reportedly cutting down its production in North America by about 20%. Waning profitability in the United States has prompted the automaker to make such a move.

Notably, considerable growth in vehicle sales in the United States in the past can be attributed to higher discounting and fleet sales. This, however, eroded the profitability of the second largest Japanese automaker. The declining profitability has prompted the automaker to rethink its strategy and cut down production in North America.

Nissan’s sales in the United States declined 6.5% so far in 2018, due to slow demand for its high-volume Altima sedan and popular Rogue crossover sports utility vehicles (SUVs). Huge discounts for Altima, Rogue crossover SUV and other models were responsible for the sharp decline in Nissan’s North American operating profit.

Presently, production cuts are in progress at Nissan’s two assembly plants in the United States and three in Mexico. However, production will not be completely stopped, with the cutbacks likely to complete later this year. Now, the company aims at improving profitability in North America while also raising sales in China, which is the biggest auto market in the world.

Currently, Nissan has a Zacks Rank # 4 (Sell).

In a year’s time, shares of Nissan have underperformed the industry it belongs to. The stock has risen 5.6% compared with 14% growth recorded by the industry.

A few better-ranked stocks in the auto space are Oshkosh Corporation (OSK - Free Report) , Allison Transmission Holdings, Inc. (ALSN - Free Report) and Ferrari N.V. (RACE - Free Report) . While both Oshkosh and Allison Transmission Holdings carry a Zacks Rank #1, Ferrari has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Oshkosh has an expected long-term growth rate of 18.3%. Shares of the company have risen 19.5% over the past year.

Allison Transmission Holdings has an expected long-term growth rate of 10%. Over the past year, shares of the company have gained 12.3%.

Ferrari has an expected long-term growth rate of 17.3%. Over the past year, shares of the company have gained 54.3%.

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