Nissan faces a tough outlook this year.
Hiroto Saikawa, Nissan Motor Company CEO, announced the company’s earnings would hit “rock bottom”, according to recent reports. That is not the most inspiring language, but the dour outlook did come in the wake of a 45 percent plunge in operating profit for this fiscal year, which ended March 31. Nissan’s net income dropped 57 percent, year-over-year.
“We would like to hit rock bottom in 2018 and 2019 and reverse the trend in the following years,” Saikawa told reporters. Automotive News reports Saikawa’s goal to improve the company’s performance by fiscal year 2022. To that end, Nissan scaled back its goals to lift its operating profit margin to 6 percent, down from a previous 8 percent. Currently, the company’s profit margin is only 1 to 2 percent in the U.S.
U.S. sales slide
Reports show Nissan’s fiscal year 2018 sales fell 9.3 percent in North America, to 1.9 million vehicles. However, its regional profit margins fell by $650 million, or 64 percent. In response to the sales slide, Saikawa called for patience. The new CEO faces an uphill battle in the wake of embattled ex-chairman Carlos Ghosn’s scandal. While his predecessor pushed Nissan’s volume to achieve profits, Saikawa is pivoting away from fleet sales to shore up brand value. By selling fewer units at a higher price — without heavy incentives — he hopes to reinforce profit margins.
Speaking of Ghosn, Saikawa had reportedly blamed Nissan’s dire state of affairs on his forebear. He said, according to AutoNews, that Ghosn “recklessly pursued volume by stoking sales with incentives and fleet sales and neglected investment in new product for key markets such as the U.S. by diverting funds into plants and a new Datsun brand for emerging markets.”
Facing strong headwinds in the wake of slowing demand and higher costs, Nissan also said it would cut 700 jobs from its Canton, Mississippi plant. As sales of vehicles like the Nissan NV and Titan drop, the company moved to shore up its North American profits.