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From le cost-killer to le target-killer. Carlos Ghosn, who brought Nissan Motor back from the brink of bankruptcy when Renault of France bought a controlling stake in 1999, is now whittling back sales forecasts. Rather than selling 846,000 cars in Japan this year, Mr Ghosn now expects to sell closer to 800,000.

That should not be a surprise – the domestic market is shrinking, as is Nissan’s share – but it hurts. Japan is the carmaker’s second biggest market, accounting for 23 per cent of sales by volume but 43 per cent of operating income last fiscal year. Neither is this the only bad news that Nissan, once the poster boy of Japanese restructuring, has to deal with. A week ago it had to recall 97,000 vehicles in North America due to faulty piston rings.

All this comes at a tough point in the product cycle. Nissan plans to launch 28 new models in the three years to March 2008, five of which were unveiled in Japan last fiscal year. Now even the newest of these is more than four months old (making it jaded in the eyes of trend-conscious Japanese drivers), and only three are due for launch this fiscal year. Nissan is also losing momentum in the US, where it competes more directly with the Detroit Big Three; sales have been falling on an annual basis for the past three months.

At home, Nissan is suffering from its failure to predict demand for small cars, which now account for roughly one-third of the market. This is one of the few vehicle categories where sales are still growing, to the relief of most of Nissan’s rivals. Nissan, however, has to content itself with selling on cars made by Suzuki, thus forgoing manufacturing profits. Nissan’s earnings forecast, which calls for a slight annual increase in profits, looks increasingly challenging.

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