Posted on 10/06/2024 2:17:34 PM PDT by george76
Nissan’s sales are plunging in critical markets, putting their profit forecasts in jeopardy. Can the struggling automaker find a way back to profitability?
Nissan is facing one of its toughest financial challenges in recent history.
Late last week, the Japanese automaker reported dismal global sales figures, raising concerns that it may fall short of its fiscal year profit forecast, which the company already lowered back in July due to poor sales. Operating profit plunged by 99% last quarter, and sales dropped 5.5% in August, marking the company’s fifth consecutive month of decline...
The picture became even more grim on Tuesday after Nissan announced its third-quarter U.S. sales, down 2.2% year over year. With major markets like the U.S. and China performing poorly, Nissan’s future looks precarious. The question on everyone’s mind is whether they can turn things around.
A losing battle in China..
One of Nissan’s biggest hurdles lies in its two largest markets: the United States and China. Together, these regions account for nearly half of the automaker’s global sales volume, and both are underperforming in different ways.
In China, Nissan’s sales slumped 24% in August. This decline was partly expected, as the company had already begun closing a plant and cutting production capacity after years of weak performance. Local competitors like BYD have taken the lead in the electric vehicle (EV) race, offering models loaded with the high-tech features Chinese consumers demand. Nissan, meanwhile, has struggled to keep up.
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Behind the curb in the United States..
The situation in the U.S. is different but equally challenging. While Chinese vehicles aren't a significant factor due to tariffs, Nissan still needs to capitalize on the growing demand for hybrids as quickly as competitors like Hyundai and Kia. Nissan doesn't offer hybrid models in a market where gas-electric vehicles are increasingly popular.
Many of Nissan's models are dated, some haven’t seen an update in nearly 5 years. While Nissan has recently introduced a new Kicks and Armada, the rest of their lineup shows its age. At the same time, competition from the likes of Ford, Chevy, Honda, Hyundai, and KIA have all recently introduced freshly updated vehicles at similar price points.
In August, U.S. sales slipped by 0.1% — a far more modest retraction than the one the company saw in China, but a point of concern nonetheless as the first monthly decline since April. That’s concerning, especially as other automakers are seeing steady growth in the EV and hybrid segments.
While Nissan saw a 2.2% decline in third-quarter U.S. sales. Hyundai reported a 5% increase in U.S. sales in that same time. Hyundai attributes the success to strong hybrid sales, which saw a 36% year-over-year jump in September.
Dealer struggles and excess inventory..
Nissan’s difficulties are hitting its dealerships hard. U.S. dealers have seen their profits fall by a staggering 70% over the past year. Despite increased spending on advertising and incentives, many Nissan dealers are struggling to move 2023 models off their lots.
James Hong, an analyst at Macquarie Securities Korea, told Bloomberg that he believes Nissan will need to either introduce new models or slash prices to clear its inventory. However, the recent launches of the Infiniti QX80 SUV and Nissan Kicks crossover won’t be enough. These lower-volume models will do little to address the stockpile of unsold cars.
Meanwhile, the company’s top-selling electric vehicle, the Ariya, is not eligible for the $7,500 federal tax credit in the U.S. because it’s manufactured in Japan. While Nissan has found some success with low-cost lease deals, the Ariya remains a tough sell in a market flooded with EV options.
A grim financial picture..
The financial outlook for Nissan is troubling. The automaker’s operating profit for the last quarter plummeted by 99%, leading to a trimming of its full-year outlook. Nissan now expects to bring in ¥500 billion ($3.5 billion) by the end of the fiscal year, a 12% reduction from previous estimates. The company also slashed its full-year sales target to 3.65 million units.
These numbers haven’t inspired confidence in investors. Nissan’s stock has dropped 27% this year. With more bad news potentially on the horizon, Nissan’s upcoming quarterly earnings report in November will be closely watched. If sales in the U.S. and China don’t improve, Nissan could be in for another rough quarter.
A path to recovery?
Despite the grim outlook, Nissan has a plan to revive its fortunes. The automaker has pledged to launch seven new hybrid and electric models in the U.S. by 2028, a move that could help it compete in a rapidly changing market. But is this enough to turn things around?
One of Nissan’s biggest challenges will be convincing consumers to wait for its new lineup of hybrids and EVs, rather than opting for the many alternatives already available. Companies like Toyota and Ford are pushing forward with innovative hybrid models, while Tesla and Rivian continue to dominate the EV market. With such stiff competition, Nissan’s timeline for releasing new models may be too little, too late.
What’s next for Nissan?
Nissan’s future is uncertain, but the company isn’t out of options. To avoid falling off the financial cliff, Nissan will need to aggressively push its new hybrid and electric models, streamline its production capacity, and continue offering attractive incentives to move current inventory. It will also need to win back consumer trust by offering vehicles that are competitive in both price, technology and style.
The road ahead won’t be easy, but Nissan’s survival may depend on its ability to make quick, decisive moves in an industry that’s changing faster than ever. The next few quarters will be crucial. Investors, dealers, and consumers alike will be watching closely to see if Nissan can turn things around before it’s too late.
I’ve got a 2012 XTerra. It is going great. I was thinking about getting their Frontier - a gas powered small truck the XTerra used as its base.
I would consider a hybrid but I bitterly resent having them forced on us.
I was just thinking that they could make a killing on selling 300 ZX’s.
Bring back the Xterra. I love mine. Practical and versatile.
Being seen driving a Nissan now a days screams “poor credit”..
Only thing worse is being seen in a Mitsubishi..
Gimme my Datsun 510 wagon that thing wouldn’t die although I tried hard as a 17 yr old
I owned three versions of the early ‘Z’ coupes through the 70s and 80s and two Maximas during the 90s. The later vehicles were great cars. Having started my family I wanted to trade into a van so I looked into the Nissan offerings. Nissan had been bought by the French by then I believe. Anyway the salesman candidly advised me to look elsewhere as the quality complaints had started to become an issue.
We test drove a half dozen medium sized SUV/Crossovers in 2017. The buzzy sounding transmission in the Nissan Rogue made it first to the “no” list.
Didn’t Nissan just about die out about 20 years ago? I remember a time when there weren’t too many on the road. Then they made a comeback.
I like the looks of their trucks. But I always found their auto designs kind of unattractive.
My friend back in the day had an early 80’s Sentra.
The Hell that car went through was legendary.
Yet that car soldiered on..up wooden trails, down a ski slope, pracitaly submerged at our fishing spot, smashing past blocking parked cars, I took 2 trips from Boston to Florida in it....
The car refused to quit..
Ditto
I miss my 1969 Datsun 510. Super reliable basic technology.
I could easily change plugs, adjust points and carb. Setting valve clearance was a piece of cake.
Want to revive the auto industry? Limit government and EPA interference and build a $10,000 car that the owner can service. They couldn’t keep up with demand.
Like that is ever going to happen.
My wife is on her third Nissan with no repairs except for normal maintenance. My only objection is her Rouge (nice SUV) has what I think is excessive road noise. My Ram 1500 is quieter than her Rouge. She would buy another Nissan and I a Ram 1500 or Ford F150. My truck is a work truck and not just a toy. Oddly My F150 went 250,000 miles with no problems except for the alternator blew because the battery shorted out. All else was just normal maintenance. Japan makes good cars. The USA is the standard for a truck.
I can't speak for Tesla, but Rivian is losing its ass. If you call going bankrupt dominating the market, well.....
Where I live Nissan Altimas are a public menace. So there’s that.
The Frontier has a 6-cylinder motor, better than the 4-cylindar Tacoma.
I had an 87 Nissan Sentra and now two Nissan Frontiers and they’ve been great.
Bring back the 4 cylinder mini truck.
The Nissan Frontier is all the rage right now.
Going into business with a French company isn’t a good move, ask American Motors.
I had a Nissan long ago. In more recent times I’ve been happy with Toyota
Sometimes you can get over difficulties if yu handle the crisis well.
https://www.youtube.com/watch?v=NaqXxC0rhSw
as it says....
“Performed by Loren “Bumps” Willert in an AMC Hornet X Hatchback. Two dummies of Bond and Sheriff Pepper were positioned either side of Willert, who was dressed in black so he wouldn’t register on camera. He completed the stunt in one take.”
That American Motors (AMC) car company was founded by Mitt’s father George Romney.
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