Nissan said that operating profit fell in the last quarter after Japan’s second-largest carmaker spent more on incentives and marketing to help sell cars in the US.
Nissan held off from increasing its annual guidance as many analysts had expected as a result of the fall in earnings, which was also caused by currency headwinds linked to the yen’s strength against the Mexican peso and the Canadian dollar.
Nissan, which has an alliance with France’s Renault, reiterated the group was on track to start producing Infiniti luxury models later this year at its new plant in Mexico with its German partner Daimler.
Carmakers worldwide have been criticised by US president Donald Trump for their plans to produce vehicles in Mexico, leading to Ford’s decision in January to cancel a $1.6bn Mexican plant.
Nissan is the largest carmaker in Mexico, where it makes 823,000 vehicles annually, although it sells more than a third in the local market and also exports to South America and Asia.
With sales of trucks and sports utility vehicles strong in the US, the company has little capacity to increase production. Joji Tagawa, Nissan’s corporate vice-president, said: “It is not just the local production of cars themselves, but we are also trying to increase the local procurement rate of [car] components.”
Another negative factor for Nissan and other carmakers in the US market is rising incentives and sliding prices of used cars, which led Nissan’s operating profit to fall 15 per cent to ¥163.5bn for the October to December quarter. Quarterly revenue fell 2.2 per cent to ¥2.9tn, while net profit rose 3.5 per cent to ¥131.7bn.
The decline in profitability came as sales from the Renault-Nissan Alliance were boosted last year by the addition of Mitsubishi Motors, taking the global partnership near to the world’s top three carmakers.
In total, the alliance sold 9,961,347 vehicles in 2016, only 3,891 behind General Motors, which sold 9,965,238 cars in the year.
Mr Tagawa said the automaker did not raise its full-year forecast — as many analysts had expected — since the company did not revise its yen outlook downward like its two rivals.
Toyota and Honda boosted their profit targets as the yen fell sharply against the US dollar after Mr Trump won the US presidential election in November, spurring hopes of US stimulus and tax cuts.
For the fiscal year ending in March 2017, Nissan continues to expect a 0.2 per cent gain in net profit to ¥525bn compared to analyst forecasts for a profit of ¥572bn.
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