Nissan aims to boost U.S. sales and profit as it closes on Honda

Published July 28, 2014

| Reuters

Nissan Motor Co Ltd aims to boost sales and profitability in the United States, its biggest market, an executive said, after Japan's No.2 automaker posted a 14 percent rise in quarterly U.S. sales, closing in on rival Honda Motor Co.

For the April-June quarter, Nissan posted a 4.3 percent quarterly operating profit margin for North America, up from the 3.8 percent it booked the same period a year ago. It sold around 350,000 vehicles in the United States, helped by the popular Altima sedan and Rogue SUV and a new dealership programme.

In the first six months of the year, Nissan's U.S. sales grew 12.8 percent, making it the sixth-best selling carmaker in the country. It surpassed Hyundai Motor Co <005380.KS> and is closing in on Honda, whose sales fell 0.8 percent during the same period.

"It's a good thing that the gap between Honda is shrinking," Vice President Joji Tagawa told a news conference. "But in the end, our goal is to boost our own sales and profitability."

Helped by strong U.S. sales, Nissan's April-June operating profit rose a higher-than-expected 13.4 percent to 122.6 billion yen ($1.20 billion), exceeding analyst estimates. It stuck with an operating profit forecast of 535 billion yen for the financial year ending in March 2015.

NEW PROGRAM FOR U.S. DEALERS

Nissan's U.S. boost comes after Jose Munoz took over the company's struggling North American operations in January, tasked by Nissan's chief executive, Carlos Ghosn, to improve sales, profitability and market share.

In April, Nissan started a new programme for its dealers that gives incentives for longer-term sales growth compared to before, Tagawa said.

"That is helping boost motivation and together with the help of new cars, we are seeing growth in vehicle volume," he said. "But North America still has profitability potential and this just marks the beginning of improvements."

In the United States, Nissan's average incentive offering per vehicle was $2,323 for April-June, according to data from TrueCar, the highest among Japanese carmakers, although it has been declining over the past few months.

Nissan also saw strong sales in China, its second-biggest market, though Tagawa said it is starting to see excessive inventory at its dealerships.

In China, Nissan's January-June sales rose 14.6 percent to about 620,400 vehicles. Tagawa said Nissan could cut wholesale vehicle volume in the coming months, though it still aims to hit profit goals.

Nissan, which was one of the many automakers that recalled cars in June due to potentially explosive airbags supplied by Takata Corp <7312.T>, expects Takata to pay back all costs related to the recall, Tagawa said. He declined to disclose the cost. Nissan recalled 755,500 vehicles globally in June, expanding a recall from April 2013.

Nissan's shares ended 0.8 percent higher on Monday ahead of the earnings release, compared with a 0.5 percent rise in Tokyo's benchmark Nikkei average <.N225>. Japan's second-largest automaker is up 13 percent so far this year, outperforming the benchmark's 5 percent drop.

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