Reports suggest that Nissan is currently facing significant challenges, and signs point to a situation that might not improve anytime soon. Last week, the Japanese automaker released global Nissan sales figures that were met with disappointment, sparking concerns that the company may once again miss its fiscal year profit targets. This projection had already been adjusted downward back in July.
According to Bloomberg, Nissan Sales suffered a 5.5 percent drop in August, marking the fifth consecutive month of decline for the company. The primary markets of concern for Nissan are China and the United States, where sales struggles are particularly troubling since these countries make up about half of Nissan’s total global sales volume. Recent reports indicate that Nissan’s U.S. dealerships are now earning approximately 70 percent less than they did at the same time last year, a drop that industry observers have called alarming.
Bloomberg has shed light on the issues Nissan faces in these two crucial markets. In China, sales have slumped by 24 percent, which may not come as a complete surprise since Nissan has been closing plants and reducing production capacity after years of declining performance. It is suggested that the automaker has been unable to keep up with local car manufacturers that are offering electric vehicles packed with high-tech features appealing to Chinese consumers.
In the United States, where Chinese vehicles are less prevalent due to tariffs, Nissan faces a different set of hurdles. The company’s lack of hybrid models has left it vulnerable in a market where gas-electric vehicles have become increasingly popular. Nissan Sales in the U.S. slipped by 0.1 percent in August, marking the first monthly decline since April. This downturn occurred despite Nissan’s efforts to control inventory in North America by increasing incentive spending. CEO Makoto Uchida stated in July that clearing the stock of vehicles on dealership lots was a priority, but recent data suggests that this strategy has not been as effective as hoped.
Additional reports indicate that Nissan’s U.S. dealers have experienced a staggering 70 percent decline in profits over the past year, despite substantial investment in advertising and sales incentives. Many dealerships are now struggling to sell 2023 models, indicating the depth of the problem.
James Hong, an analyst at Macquarie Securities Korea, remarked that Nissan will either need to introduce new models or reduce prices to clear out existing inventory. Although the company recently launched the Infiniti QX80 SUV and the Nissan Kicks crossover, these are lower-volume models and are unlikely to have a significant impact on reducing the overall stockpile.
The challenges don’t stop there. Nissan’s top-selling electric vehicle in the U.S., the Ariya SUV, is not eligible for the federal government’s purchase tax credit of up to $7,500, as it is manufactured in Japan. To counter this, Nissan has taken advantage of credits available for leased vehicles, offering leases as low as $199 per month, making the Ariya one of the more affordable EVs on the market. However, data from car-shopping researcher Edmunds shows that Nissan Sales continue to face obstacles, with the company maintaining some of the highest inventory levels among major automakers in the United States.
Nissan has announced plans to introduce seven new hybrid and electric vehicles in the U.S. market by 2028, but many industry analysts remain skeptical. Questions linger about whether consumers will wait for Nissan’s upcoming EVs and hybrids when there are already numerous alternatives available.
Further insights from Bloomberg reveal the extent of Nissan’s financial difficulties. The company’s operating profit plummeted by 99 percent last quarter, prompting management to revise its annual profit forecast down by 12 percent to ¥500 billion ($3.5 billion). Nissan also lowered its full-year sales target to 3.65 million units. Investor concerns have been evident, with the company’s shares falling 27 percent this year. Additionally, S&P Global cut Nissan’s credit rating to junk status in March of the previous year.
Despite these ongoing setbacks, Nissan plans to repurchase ¥79.9 billion worth of its shares from Renault as part of an agreement to rebalance its alliance with the French carmaker. The next critical point for Nissan Sales will be in November when the company releases its earnings for the current quarter. If sales in the U.S. and China do not improve by then, the numbers are expected to be disappointing.
Nissan currently finds itself in a challenging position, and all eyes are on how the automaker will tackle these difficulties. Many hope that the company can sustain itself through sales of popular models like the Rogue and Altima until its new wave of EVs and hybrids make their market debut.
