Nissan Motor chief executive Carlos Ghosn has attempted to allay fears of a protracted fall in the car maker’s sales, characterising last month’s sudden, sharp slide as a short-lived reaction to the completion in September of a highly publicised sales drive.
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Reuters noted that, under its last business plan, Nissan had promised to sell 3.6m vehicles globally in the 12 months to the end of September. The final tally of 3.671m meant that Nissan had delivered on all three commitments under the “Nissan 180” plan: 1 million additional sales compared with fiscal 2001, an operating margin of at least 8% and zero automotive debt.
But in an evident payback from straining to reach the final and most difficult volume commitment, sales in October sank by double digits in all three major markets – the United States, Japan and Europe – and industry analysts reportedly are wondering how long the impact will last.
Speaking at an event for journalists in Tokyo, Ghosn reportedly sought to put their minds at ease saying last month’s performance was an aberration, and predicted a return to normality by December.
“(Sales in) October went down as a correction,” he said, according to Reuters, adding: “I think the effect will be very short-term. You may see some effect in November, and then it will disappear.”
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By GlobalDataThe news agency said Ghosn has been praised for championing profit objectives over size even as US rivals General Motors and Ford piled on discounts and other incentives despite losing money on every car or truck they sold.
But some analysts have criticised Nissan’s dogged sales commitment as running counter to its promise of placing profits first, Reuters noted.
“When Carlos Ghosn uses the word ‘commitment’, that means they’re going to do it come hell or high water. And that’s precisely what they did,” Christopher Richter, auto analyst at CLSA Asia-Pacific Markets, told the news agency. “Ultimately, pushing a lot of cars through the pipeline to satisfy a sales goal is not a worthwhile goal.”
Reuters said Nissan’s retail sales in the United States dropped 16.5% in October from a year earlier to 72,279 units – the first fall in more than a year – while sales tanked by 34.4% in Europe to 29,044 units and by 13.2% in Japan to 50,996.
That reportedly has led analysts to believe that demand in the run-up to the 30 September deadline was inflated by sweetened sales deals, eating into margins.
Reuters also noted that Nissan’s operating profit margin slipped further than its rivals’ last quarter, to 8.7% from 9.6% in the April-June period.
Ghosn reportedly conceded that Nissan’s sales staff around the world likely went the extra mile to meet the 3.6-million-unit target, but he defended the company’s practice of setting a sales volume objective, saying it was vital for ensuring earnings growth.
As long as the volume objective was twinned with a profit margin target, he said, there was no danger of “buying” size at the expense of profits, he said, according to Reuters.
Nissan’s new business plan that kicked off in April also includes a sales volume goal, to sell 4.2 million vehicles in the year ending March 31, 2009, while maintaining the “top level” of operating profit margin among global auto makers for each of the three years of the plan, the news agency’s report added.
