Overproduction woes in the car industry


carJapanese automotive giant Nissan has announced a cull of its global workforce, cutting 12,500 jobs. The company is feeling the heat from the overproduction crisis hitting the global automotive market. Last year its sales were down by 4.4%, with that figure breaking down into a 9% drop in US sales and a 15% drop in Europe, where the general situation of market glut was aggravated by the backlash against diesel.

This collapse in sales has translated into a crisis of overcapacity, a result of the anarchy of capitalist production, and now Nissan workers all over the world are holding their breath to see which of their number are to be rendered surplus to capacity and destined for the scrap heap.

Under pressure from a fraud scandal enveloping Nissan boss Mr Ghosn, the marriage of convenience between Nissan and Renault is on rocky ground, with France agitating Nissan to build more of its cars in Renault’s French under-used plants.

Nissan employs 8,000 workers in Britain, 7,000 of whom annually assemble nearly half a million vehicles in Sunderland, including the diesel Qashqai model. The other thousand, working in marketing and research, are located in Hertfordshire, Bedfordshire and west London (Robert Lea, ‘Nissan to cut 12,500 jobs around the world’, The Times, 25 July 2019).


The global automotive industry has come to rely heavily on the ability of the Chinese market to go on soaking up an endless expansion of auto production. As the world’s single biggest car market, it has previously served to mask the true dimensions of the overproduction crisis besetting the industry worldwide. However, with China’s phenomenal growth rate now slowing, some of the industry’s biggest hitters are feeling a chill breeze. VW suffered a 6% year-on-year decline in sales for the first quarter of the year, whilst GM sales fell by 10%. Ford’s plants in China operated at just 11% capacity in the first half of the year. The French company PSA, in a joint venture with Chinese manufacturer Dongfeng Auto, saw its China sales down 62% in the first half, and its plant operating at just 22% capacity.

Whilst most companies regard the Chinese market too big to ignore, the Japanese carmaker Suzuki last year pulled out. It seems that the days when the Chinese market could be relied upon to stave off the evil consequences of the rest of the world’s overproduction are numbered (see Tom Hancock et al, ‘Shrinking Chinese car market sparks fears over foreign groups’ future’, Financial Times, 28 July 2019).