Nissan is said to cut China sales outlook as market sputters

By BLOOMBERG

TOKYO • Nissan Motor Co Ltd i s cutting a future target for China car sales by about 8%, people familiar with the matter said, signalling that the downturn in the world’s biggest car market may be an extended one.

Nissan and Dongfeng Motor Corp now forecast that their joint venture will sell 2.39 million vehicles in 2022, the end of the current mid-term plan.

That’s a reduction of 220,000 units from the previous target, the people said, asking not to be identified because the outlook isn’t public.

Including imports, they sold a total of 1.56 million vehicles in China in 2018, an increase of 3.4%.

One key factor is that Nissan is in between models at a time when the market is weak. Passenger vehicle sales in the country fell 6% to 22.7 million units last year, the first decline since the early 1990s, while ongoing trade tensions with the US threaten to dampen demand even further.

No major new Nissan models are planned for the China market through 2020, and its luxury Infiniti brand plans no new vehicles through 2021, the people said.

“Fresh new models is what keeps traffic coming to the showroom,” said Bill Russo, CEO of Shanghai-based consultancy Automobility Ltd. “It’s especially true in hyper competitive markets like China.”

Nicholas Maxfield, a spokesman for Yokohama-based Nissan, declined to comment on the new targets. A spokesperson for Wuhan, Chinabased Dongfeng said the company didn’t have any immediate comment.

Dongfeng shares fell as much as 2.2% in Hong Kong yesterday, while Nissan was mostly unchanged in Tokyo.

China was a key priority for Carlos Ghosn, the former chairman of Nissan and its alliance with Renault SA and Mitsubishi Motors Corp, before he was charged with falsifying financial information and breach of trust late last year.

While Nissan CEO Hiroto Saikawa remains committed to China, he is embarking on a programme to put profitability before growth, said the people. Saikawa has criticised Nissan’s strategy of offering above-average incentives and sacrificing profits for market share in the US.

Given current conditions, this is probably t he r ig ht approac h, according to Janet Lewis, analyst at Macquarie Capital Securities (Japan) Ltd. “The move by Saikawa to improve the profitability of sales, even if it means a lower market share, is correct.”

Nissan’s mid-term plan calls for an operating profit margin of 8% on revenue of ¥16.5 trillion (RM601.58 billion) by 2022, with China contributing almost a third of revenue.

Ghosn had pledged to invest US$9 billion and introduce a slew of new electric vehicles, as Nissan vies with global rivals including Volkswagen AG and General Motors Co to become the largest electrified vehicle maker in the country. — Bloomberg