Nissan, rocked by the financial crisis, is withdrawing from the Renault-Nissan Alliance’s industrial project in the Tangier Med Zone.

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Just one year ago, Renault-Nissan signed an agreement with the Moroccan government to build a plant to produce low-cost cars on Renault’s Logan platform and Nissan-designed light commercial vehicles. Nissan would have contributed 20% to the project. On Monday, the Japanese automaker announced a massive global restructuring involving 20,000 layoffs, which amounts to 9% of its global workforce. Nissan-Renault Group CEO Carlos Ghosn cited an enduring escalation in the value of the yen as well as sinking demand for autos as the principal reasons for the company’s decision. Nissan’s restructuring will also include reductions in executive pay, scaled-back investment plans, and a suspension of the company’s second-half dividend.

Moroccan Minister of Industry Ahmed Reda Chami said that the project would move forward anyway, and that he expects the downward trend in demand for automobiles to turn around sometime soon. The plant, a strategic, long-term project for the production of low-cost cars, is one of the kingdom’s most high profile and highly anticipated industrial endeavours. It is expected to produce 400,000 low-cost vehicles a year with an investment of $778 mn. Mr. Chami maintains that Nissan’s pullout will have a “very limited impact” on the project. It is unclear for now how the plant will be affected.

Japanese automakers have been hit hard by the global economic downturn. Nissan, the country’s third-largest producer of cars and trucks, warned it would suffer a net loss of $2.89 bn in the financial year ending March 31. Global sales were down 18.6% in the October-December period of 2008 and net income after tax was down 87.5% compared with the previous year.