Nissan Motor intends to reduce excess production capacity of AD compact van. Credit: Sergio Photone/Shutterstock.

Nissan Motor is planning to halt the production of its AD compact van in November this year to reduce excess production capacity, reported Bloomberg.

This decision comes as Honda prepares to potentially incorporate the struggling carmaker, Nissan, into its operations.

In December, Nissan and Honda signed a memorandum of understanding to explore a merger through the establishment of a joint holding company.

Both companies would become wholly-owned subsidiaries of this new entity. The proposed deal with Honda, which would effectively divide Japan’s automotive industry into two factions, has intensified the examination of Nissan’s business operations.

A spokesperson from Nissan was cited by the news agency as saying that Nissan’s 50%-owned manufacturing unit, Nissan Shatai, has not yet made any decisions regarding job cuts.

The AD van represented approximately 7,000 of the 150,000 vehicles produced by Nissan Shatai at its Shonan plant in Kanagawa, Japan during the fiscal year 2023.

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The NV200 Vanette compact van, also manufactured at this facility, may face production cuts as well, reported The Japan Times.

This follows the December announcement that Nissan and Honda Motor Co. had initiated discussions on a business merger. Approximately 6,700 of the 9,000 job reductions announced by Nissan last year will affect production units, as per Nikkei.

Later this month, Honda and Nissan plan to outline a negotiation framework. The firms aim to list a joint holding company by August 2026.

In 2024, Reuters reported that Nissan Motor was planning to cut 9,000 jobs and reduce its global manufacturing capacity by 20% to save $2.6bn this fiscal year, as it faces declining sales in China and the US.