TOKYO: Shares in Nissan Motor slumped around 6% on Tuesday after its second-largest shareholder, Mercedes-Benz, said it would sell off its roughly $346 million shareholding — a 3.8% stake — in the struggling Japanese automaker.

The slide in shares underlines investor scepticism over Nissan’s turnaround prospects as it battles tariffs and falling sales in its key markets, the U.S. and China, that saw it book a $535 million loss for the three months ended June.

CEO Ivan Espinosa, who took the helm in April, has announced a sweeping restructuring plan to restore profitability. The plan includes slashing global production capacity to 2.5 million vehicles from 3.5 million and manufacturing sites to 10 from 17 by fiscal 2027.

Nissan shares were trading at 341 yen ($2.31) by the midday break, down about 6% from Monday’s close of 363 yen, putting them on track for the steepest one-day decline since early July.

Nissan declined to comment.

On Monday, a Mercedes spokesperson said the Nissan stake, which was transferred to its pension assets in 2016, was not of strategic importance and described the planned sale as cleaning out its portfolio.

Espinosa said late last month that Nissan was still in the early stages of recovery, but was making progress on cutting costs.

In early 2021, Japan’s third-biggest automaker sold its 1.5% stake in Mercedes, at the time Daimler AG, to help it overcome financial difficulties.

Reuters