China bears the brunt of the criticism because COVID lockdowns there stopped sales and production. Nissan produces and sells a third of its products worldwide in China.
Due to slowing output and declining sales, operating profit fell 14%.
TOKYO – Nissan Motor Co.’s operating profit fell 14% in the most recent quarter as the automaker’s recovery on stronger pricing power was undermined by declining sales and manufacturing bottlenecks.
Nissan had a difficult fiscal first quarter, according to COO Ashwani Gupta, who noted that output was hampered by pandemic lockdowns in China and the global semiconductor scarcity. Nissan, however, continued to stick to its full-year financial targets as it saw conditions improving.
In the months of April through June, operating profit decreased to 64.9 billion yen ($475.9 million), resulting in a 3 percent profit margin. This represents a step back from Nissan’s midterm aim of producing a sustainable 5 percent operating profit margin (down from 3.8 percent a year earlier).
In the three months that ended on June 30, net income dropped by 59 percent to 47.1 billion yen ($345.4 million).
Even though global sales fell 22 percent to 819,000 vehicles over the course of the three-month period as a result of sluggish manufacturing, revenue increased 6.4 percent to 2.01 trillion yen ($14.74 billion).
Sales in North America decreased by 35% to 247,000 vehicles, while deliveries in Europe decreased by 25% to 68,000 vehicles. Nissan’s biggest market, China, saw a volume decline of 15% to 299,000.
The company’s Nissan Next midterm plan has been hampered by the profit decline. The resuscitation plan, presented in 2020 by CEO Makoto Uchida, aims to increase income per vehicle while reducing fixed expenses and production capacity. The campaign ends in the fiscal year that ends on March 31, 2024, but Nissan is in many ways ahead of schedule.
The recent quarter’s operating profit fell mostly as a result of rising transportation and raw material prices, whereas prior-year earnings were bolstered by one-time gains.
Net income decreased when compared to the prior year, when figures were boosted by a windfall from Nissan’s sales of its interests in Daimler, a junior partner in Nissan’s long-standing partnership with French colleague Renault and a German carmaker.
At the same time, profits were helped by a strong foreign exchange tailwind as the Japanese yen fell in value relative to the US dollar. This contributed roughly $188.5 million.
Nissan has been progressively increasing revenue per vehicle sold in recent quarters, mostly by utilizing a slew of updated products, which has helped to reinforce its core profitability.
The current fiscal year, which runs through March 31, 2023, is likely to continue to show improvement, according to Nissan executives. That is due to the fact that the Chinese lockdowns have largely ended and semiconductor supply is increasing.
According to CFO Stephen Ma, the volume recovery “should materialize in the next few months.”
Nissan expects operational profit to rise by a slight 1.1 percent to 250 billion yen ($1.83 billion) for the fiscal year, while net income will fall.
Rising raw material costs, particularly for metals like steel and aluminum, will restrain operating profit. Because of a unique profit from the sale of Daimler, net income is anticipated to decline.
In the current fiscal year, Nissan projects that its worldwide sales would increase by 19% to 10 trillion yen ($73.3 billion). Additionally, a 3.2% increase to 4 million additional vehicles are anticipated in global sales.
Nissan is “cautiously optimistic” despite a 14% decline in operating profit.
The Japanese company’s announcement provides some hope for the auto sector, which has been severely hampered by supply chain disruptions that have complicated carmakers’ production schedules.
According to Nissan Chief Operating Officer Ashanti Gupta, steps have been taken to replace custom-made semiconductors with general-purpose chips over the medium term and to secure inventory levels with suppliers in the short term.
The executive added that all of Nissan’s Chinese suppliers have resumed operations at full strength.
We are using these challenges as a chance to further refine our business practices, Gupta said.
The business maintained its full-year operating profit target of 250 billion yen ($1.85 billion) for the year ending on March 31 and aimed to sell 4 million devices globally.
At the same time that COVID-19 lockdowns are ending, Gupta emphasized that the chip scarcity “is not gone.”
Nissan blamed a shortage of chips, pandemic precautions in China, and high commodity prices for the first quarter’s operating profit decline of 14% to 64.9 billion yen, while a weaker yen had brought some relief.
Due to low inventory, the company produced 15% fewer vehicles—812,000—than it had anticipated for the months of April through June, and worldwide retail sales decreased by about 22% from the same time last year.
The primary cause of the operational profit’s decline and subsequent reduction by 50.7 billion yen was the rising cost of raw materials, especially aluminum and steel. Gupta claimed that a sales increase of 53.5 billion yen offset the effects of higher commodity prices.
Nissan’s first quarterly loss in a decade is brought on by weak sales.
Nissan suffered its first quarterly loss since 2010 as a result of lackluster sales, which made the automaker’s issues worse and coincided with ongoing disputes with its former CEO Carlos Ghosn.
The Japanese automaker announced it would not distribute a dividend at the end of its fiscal year and reported a net loss of Y=26.1bn (PS183m) between October and December.
For the fiscal year that ends on March 31, it anticipates profits to plummet to Y=85 billion (PS 596 million), a 43% decrease from the prior year.
The prognosis was downgraded as a result of the financial year’s first nine months’ sharp declines in revenues and operating profitability. Between April and December, revenues decreased by 12.5%, and operating profits fell by 82.7% to Y=54.3 billion.
The company put the dip down to “poor performance and a downturn in total industry volume,” which increased the pressure on Makoto Uchida, its new CEO.
Although sales volumes have been low, we are still making progress, therefore more reorganization is required than originally anticipated, according to Uchida.
Nissan is dealing with a number of issues, including a decline in sales attributed to an aging model selection and aggressive discounting. It must also conserve money while making significant investments in the technologies of driverless and electric vehicles, a challenge faced by all major automakers. The corporation unveiled a plan in July to eliminate 12,500 jobs globally.
Forecasts for this company have not yet taken the effects of the coronavirus outbreak into account. In addition to factory closures in China, Nissan has announced that it will temporarily suspend production at a plant in Kyushu, Japan, due to supply chain stress. Car sales in China are almost guaranteed to decline as a result.
Due to political maneuvering between Nissan and its partners in the largest automaking alliance in the world, France’s Renault and Japan’s Mitsubishi, the firm has been plagued by issues since Ghosn’s departure.
The scandal surrounding Ghosn’s arrest and his dramatic escape, who was the driving force behind the alliance, has diverted attention away from Nissan.
Nissan executives reportedly denounced Ghosn to authorities in November 2018 over claims that he had misrepresented his pay. He avoided a trial, however, by taking a private jet from Tokyo to Lebanon. Since then, he has railed against what he perceives to be injustice, accusing “unscrupulous, vengeful individuals” at the carmaker of plotting to bring him down and equating his situation to the Pearl Harbor attacks.
Nissan is currently suing Ghosn in civil court in an effort to recoup expenses it claims were caused by wrongdoing. Ghosn has refuted every allegation.
Nissan, Honda, and Toyota China’s sales drop lessens in May.
Toyota Motor, Honda Motor, Nissan Motor, and Mazda Motor, the four major Japanese automakers, all had their monthly sales volume in China decline from a year earlier in the fifth month of 2022. Furthermore, Toyota was the only company whose May sales in China increased from April.
Toyota, Honda, and Nissan all had a negative trend in their total China sales volume from January to May, with Nissan reporting the largest year-over-year loss of 26.2%. Toyota maintained its position as the Japanese company selling the most cars, with a total of 704,200 units sold, a 12.3% decrease from the previous year.
Mazda’s year-to-date sales volume was kept a secret in order to protect its April sales numbers. According to information published by the Japanese media site Kyodo, the carmaker sold 8,280 vehicles in May, a decrease of 43.8% from the same month last year.
Toyota sold 148,500 vehicles in China in May alone, significantly improving on the weak April sales with a 33.66% increase month over month. Overall, the figure stayed lower than it was a year earlier.
The manufacturer noted that in addition to the pandemic’s unavoidable impact on manufacturing, poor customer demand also limits retail store sales. Due to the global lack of semiconductor supplies, its high-end imported brand Lexus experienced a 29.9% year-over-year sales fall in China in May.
In terms of Honda, the business sold 89,083 automobiles in China during the last month, which is a decrease of 6.44 percent and 30.8 percent from the same period last year. Dongfeng Honda, for example, witnessed a year-over-year decline of 45.1% with 36,440 vehicles sold last month, while GAC Honda saw a 15.6% decline to 47,124 vehicles in May sales.
The carmaker acknowledged that finding auto parts has been difficult. The two joint ventures’ production schedules had to be adjusted as a result of the inadequate supply of car parts, which had an impact on sales.
In an effort to improve its performance, Honda intends to concentrate on the sales and marketing of its recently announced battery-electric vehicle in the nation.
Nissan’s monthly China sales fell 38% year over year in May to 68,844 vehicles sold. Sales of several Nissan and Venucia-branded cars, however, increased significantly over the same time last year.
Nissan sold 49,875 vehicles in total last month, with the SLYPHY accounting for more than half of those sales with 26,592 units sold, a slight increase of 1.8% from April. The Venucia brand sold 5,609 automobiles in the interim, bringing the total number of vehicles sold in the first five months of this year to 34,639, up 22.7% over the same period last year. However, the models’ contribution to the sales growth did not significantly improve the company’s sales performance.
The Chinese government has announced many strategies to enhance market confidence in order to address the issue, including the policy that reduced the purchase tax on specific car models by half and the “new energy vehicle travelling to the rural” campaign.
The two Japanese automakers, Toyota and Nissan, both had high expectations for the outcomes of the policy, according to Kyodo.
Why has Nissan’s fortunes declined?
Markets all throughout the world are seeing declining revenue and profitability. At a time when vehicle sales are at almost record highs, the United States, its second-most important market after China, saw sales decrease 11% in 2019. Analysts and business leaders blame Ghosn heavily for Nissan’s problems.
What’s wrong with Nissan, exactly?
Nissan cars are frequently seen as a safe first choice for inexperienced drivers, but they are not without problems. Nissan’s cars, like those from other automakers, have their fair share of typical faults, from decaying bodywork and oil leaks to broken hood latches and problems with their CVT gearbox technology. In order to help you keep an eye out for issues and identify them early, we’ve compiled a list of some of the most frequently encountered issues for Nissan owners and those looking to purchase a new Nissan vehicle in the near future.
Is Nissan profitable?
Nissan Motor Co. this week declared its return to profitability for the first time since 2019 following two years of significant losses and reductions in manufacturing capacity and the number of models it sells, noting that it is also making steady progress toward its 2030 growth objectives.
Are Nissans still worth anything?
Even though you have loved your Nissan from the day you purchased it, the time will come when you must part with it. But what price should you set for it? Your Nissan’s resale value must be determined by taking into consideration a number of elements. Let’s look at them:
Depreciation: As soon as a car leaves the dealership lot for the first time, its value begins to decline. Even popular models might lose up to 40% of their worth after three years of ownership, despite the fact that Nissans typically retain their value well.
Mileage: To get the best resale price, keep your car’s mileage between 12,000 and 15,000 miles each year and attempt to sell it before it reaches 100,000 miles.
Accident history: Naturally, accidents reduce the value of your Nissan. Your Nissan’s value may decrease by 15% to 30% even if it was totally repaired after the collision.
Popular models: Due to consumer demand, popular models like the Nissan Titan and Nissan Frontier, SUVs, and hatchbacks generally keep their value.
Interior and exterior conditions: The more new-looking your car is, the more money you can get for it when you sell it. Your Nissan’s value will decrease as a result of scratches, dents, and damaged upholstery.