Japan’s third-largest automaker and producer high quality Infiniti catalytic converter, Nissan Motor has announced last Tuesday an unfortunate event—its profit fell for the third consecutive quarter resulting from the decline in domestic demands. The Japanese automaker has been able to sell a small volume of light trucks in the US while paying more in taxes.
The net income of Nissan has dropped by 16 percent to ¥92.3 billion, or $765 million within three months ending June 30 from ¥110.2 billion earlier this year according to the statement released by the company last Tuesday. The company’s report was in line with the ¥96 billion estimate made by five analysts that has participated in the survey conducted by Bloomberg. Sales have increased by 11 percent to ¥2.45 trillion in the quarter.
The low sales of Nissan in Japan is attributed to the aging population as well as the lack of new car models, while its sales in the United States was caused by the high cost of gasoline. This has destabilized the benefits of a weaker yen as well as affected the demand for small and midsize car in the US which happens to be Nissan’s largest market.
Takashi Aoki, a fund manager at Mizuho Asset Management said, "Dropping domestic sales are pulling results down, while a worsening product mix worries me as only the cheap cars like the Versa and Sentra seem to be selling well."
Last fiscal year Carlos Ghosn, the Chief Executive Officer for Nissan has abolished the bonuses for top executives including himself as a result of the automaker’s failure to reach its target resulting to a drop in profits.
Nissan has not launched any new passenger cars in the domestic market for the last 16 months in which time its co-Japanese automakers Toyota has been able to introduce 1 new or redesigned model while Honda has come up with three new models. Ghosn has stressed that Nissan should improve its strategies especially in coming up with new models more frequently than they are used to.
Last April, Ghosn has relinquished the supervision of its North American operations. This has given Ghosn more time to concentrate in improving the performance of both Nissan and Renault. At present Renault owns 44.3 percent of Nissan.
In the last three months ending June 30 Nissan together with Toyota and Honda has been able to take advantage of the 5.3 percent drop in the value of yen against the dollar. The Yen was also 11.7 percent weaker than the euro.
Nissan has also announced its full-year forecasts wherein it will introduce 11 new or redesigned vehicles for this fiscal year. The automaker is also expecting for its new models to boost net income by 4.2 percent higher than the ¥480 billion forecasted figures in the 12 months ending next March.
In addition as the company shifts to fiscal year it is also expecting a decline in its revenue for both Europe and Mexico by 1.6 percent to ¥10.3 trillion.
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