• Nissan is actively cutting costs on Mexico-built models like the Sentra and Kicks to mitigate the impact of 25% U.S. import tariffs.
  • The automaker is exploring production shifts and increasing local parts content to preserve affordability and margins.
  • Without relief, analysts warn of price increases of up to $3,000 per vehicle, squeezing entry-level buyers.

Tariff Pressure Mounts

Nissan Motor Co. is scrambling to reduce costs on vehicles produced in Mexico as the 25% tariff on imports from its southern neighbor threatens to upend its U.S. pricing strategy. The company, heavily reliant on Mexican plants for entry-level models like the Sentra sedan and Kicks crossover, faces a potential cost increase of $2,500 to $3,000 per car, according to people familiar with the matter.

“We are taking measures to mitigate the tariff impact, including cost reductions and exploring alternative sourcing,” a Nissan spokesperson said, declining to elaborate further. The automaker has been in talks with suppliers to increase the share of North American-made components in Mexican-built vehicles, aiming to qualify for more favorable treatment under the USMCA trade agreement.

Production Shift Options

Nissan is also weighing a partial shift of production to the U.S. or Japan, though such moves would take time and raise costs in other areas. The company’s leadership has publicly argued that the 25% levy is unsustainable long-term and has lobbied for tariff relief to maintain affordability for price-sensitive consumers.

“Without a deal, Nissan would be forced to raise prices or reduce incentives on its most affordable models, potentially alienating a key customer base,” said an industry analyst who tracks the automaker. The Sentra and Kicks are crucial for Nissan’s volume in the U.S., where new-car prices have already surged.

Race Against Time

The tariff, imposed earlier this year under the administration’s trade policy, has hit Japanese automakers particularly hard given their historic reliance on Mexico for low-cost production. Nissan’s efforts to restructure its supply chain are ongoing, but executives privately acknowledge that short-term fixes are limited.

Correction: A previous version of this article misstated the tariff rate as 20%. It is 25%.