Nissan’s slow US sales torpedo global profits

SALES of Nissan’s newly launched Rogue – its top-selling US nameplate – have forced the Japanese manufacturer to introduce a range of incentives on its substantial inventory of unsold, previous-generation models.

The result was soaring expense that almost erased the parent company’s operating income, reports Automotive News Europe.

In announcing the situation in Nissan’s fiscal first quarter, CEO Makoto Uchida blamed the downturn on the company’s US operations and cut the company’s full-year financial outlook.

“We were able to boost volume as expected,” he stated. “This has been a very challenging quarter for Nissan.”

Nissan’s operating profit fell 99 per cent to 995 million yen ($A9.6m) in the three months ended June 30. Net income fell 73 per cent to 28.6 billion yen ($A276.3m).

Globally, Nissan sales have stagnated at 787,000 vehicles in the April-June quarter. Nissan’s North American volume declined 1.7 per cent to 323,000 units, on a 3.1 per cent slide in US deliveries to 237,000.

ANE suggests the sales slide comes from problems in model changeovers for the Rogue (equivalent to X-Trail) and Sentra (small car) models as well because of “Nissan’s aging product portfolio and its lack of hybrids”.

“The results for the first quarter were due to the impact of the US operations,” reiterated Mr Uchida. “We knew that optimisation of inventories in the US would pressure our profit.”

Nissan booked overall selling expenses and pricing adjustments of approximately 77.8 billion yen ($A752.8b), taking a sizeable chunk from its operating income.

The Japanese-based OEM cleared stocks of 2023-plated Rogue models as it rolled out the MY24 update, the model changeover, Mr Uchida says, further undermined by a sudden softening of the overall US market demand.

ANE reports that Nissan’s spending over the quarter came mostly in the form of consumer loan assistance.

The company’s global inventory, including dealer and customer stocks, has ballooned from 250,000 in March 2022 to over 640,000 units in the last quarter. It is understood Nissan plans to reel in its inventories to a more manageable level of the July-September quarter, partly by adjusting production.

Upcoming updates of higher-margin, up-market nameplates including the Murano and Armada SUV will help the cause. Mr Uchida says he believes inventories can be reduced by 20 per cent by the end of the calendar year.

In other regions, Nissan sales rose 7.6 per cent to 79,000 units in Europe in the quarter ended June 30. China saw stabilisation contributing a 3.3 per cent increase to 167,000 vehicles, while Japanese domestic market sales fell 8.0 per cent to 98,000 units.

Looking further ahead, to the end of the full Japanese fiscal year (ending 31 March 2025), Nissan now expects operating profit to decline.

“Given the challenges of the first quarter, we are revising our guidance for the full year,” stated Mr Uchida.

Operating profit is expected to fall 12.0 per cent to 500 billion yen ($A4.8b).

Nissan also cut its sales outlook for the current fiscal year. It now expects global retail deliveries of 3.65 million units, down from the 3.7 million initially outlined.

With Automotive News Europe