December 20, 2018 / 7:38 PM / 5 months ago

Nissan to lay off 1,000 Mexican workers, cites market challenges

Cars made by Nissan are parked in the compound of the Nissan manufacturing complex in Aguascalientes, Mexico August 29, 2018. Picture taken August 29, 2018. REUTERS/Liberto Urena

MEXICO CITY (Reuters) - Japanese carmaker Nissan Motor Co Ltd (7201.T) will lay off about 1,000 workers in Mexico at two factories, citing “challenging market conditions,” the company said on Thursday.

The layoffs will hit Nissan’s Cuernavaca and Aguascalientes manufacturing facilities. The company is still determining how the cuts will be distributed across the two plants but has already begun laying off people in Aguascalientes, Herman Morfin, a spokesman for Nissan Mexico, told Reuters.

In a separate email, Brian Brockman, Nissan’s director of corporate communications, wrote that Nissan would adjust its production levels “in response to challenging market conditions in Mexico.”

Nissan attributed its decision to a “decline suffered by the Mexican automotive industry,” driven by an increase in the costs of raw materials, among other factors.

In May, the Japanese auto maker said it would reduce vehicle production by up to 20 percent in North America. The decision was a response to the company’s declining profitability in the United States, the world’s second-biggest auto market and Nissan’s top market for sales.

Japanese auto makers have grappled with weak sedan sales in the United States as larger vehicles such as pickup trucks and sport utility vehicles grow more popular. Nissan’s sales of the Versa sedan were down 30.7 percent from January through November, compared with the same period last year.

Nissan’s North American vehicle sales dipped 8.4 percent during the second quarter.

Reporting by Anthony Esposito in Mexico City & Ben Klayman in Detroit; Writing by David Alire Garcia and Julia Love; Editing by Jeffrey Benko, James Dalgleish and Dan Grebler

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