Nissan may not be able to achieve its twin targets of 8% global market share and an 8% operating margin under its Nissan Power 88 road map to the end of fiscal 2016, reported the Nikkei Asian Review.
It said that profitability had suffered as Nissan focused on raising market share with operating margin slipping to around 4%. Nissan appears to be the only Japanese carmaker with weak results in fiscal 2013, a period when the yen’s depreciation has boosted profits at all its rivals.
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At last month’s announcement of April-December results, corporate vice president Joji Tagawa acknowledged that it would be difficult to achieve 8% for both market share and profitability. He added: “The share is a target, but the profitability is a commitment for us.”
He denied this was a shift in policy saying that this had been the company’s thinking all along. But with profitability eroding due to a focus on market share, industry watchers believe Nissan has modified its strategy.
Incentives in the US have seen Nissan sales jump there 14% for the nine months ended 31 December but group operating profit rose just 10% – the slowest pace among the carmakers.
The new car market in the US expanded 8% to 15.6m units last year but is predicted to slow down this year, with many market observers projecting that new car sales will rise just 2% to around 16m.
This could lead to a price war with Ford already forecasting profit to decline this year, blaming price competition. Tagawa said: “If other companies offer discounts, we cannot just sit there without doing anything.”
