With all the negative news coming out of China and Japan these days in terms of the political relations between two countries, one would assume that Japanese car makers such as Nissan would suffer lower export sales to the Chinese market. In both countries, rhetoric has been hyped up after Japan agreed to buy (and effectively nationalize) the Senkaku islands. And in turn, the Chinese government has been ratcheting up nationalistic anti-Japanese fervor by recalling second World War events in China, such as the Nanking Massacre.
And yet despite these tensions, auto makers such as Nissan have recorded record profits in China where its sales increased 17 percent to 1.27 million vehicles for the fiscal year through March 2014, while it’s sales grew 13 percent in the U.S. to 1.29 million vehicles. In Japan, sales grew by 11 percent to 719,000 vehicles. Overall, Nissan’s January-March profit totaled 114.9 billion yen ($1.1 billion), up from 109.7 billion yen the year before. Quarterly sales rose more than 20 percent to 3.2 trillion yen ($31 billion)- all outpacing the industry including it’s competitors in Japan, including the world’s no.1 auto maker- Toyota- who also reported record annual profit and sales above 10 million vehicles for the first time. Meanwhile Honda, which sold 4.3 million vehicles for the fiscal year ended March 2014, is forecasting a 4 percent rise in annual profit for the fiscal year.
As ABC reports, while all of this looks surprisingly rosy- especially given the situation with China, the trend is not expected to continue…
Both its quarterly and annual profit results were better than Nissan’s own forecasts and the projections by analysts surveyed by FactSet. A weak yen has been a boon for Japanese exporters such as Nissan, which makes the March subcompact, Infiniti luxury models and the Leaf electric car, and is allied with Renault SA of France. But the perk is not expected to continue. Although the dollar soared to about 100 yen during the past fiscal year from about 80 yen the fiscal year before that, it’s unlikely to keep rising at that pace, to 120 yen, for instance. And that’s weighing on the prospects of all the Japanese automakers, including Nissan, Japan’s No. 2 automaker, because profits are unlikely to keep growing at the current pace.
Nissan sold 5.2 million vehicles around the world in the fiscal year ended March, controlling about 6.2 percent of global auto market. It expects to sell 5.65 million vehicles during the fiscal year through March 2015, which would raise its global market share to 6.7 percent.
Carlos Ghosn, CEO of the Renault-Nissan Alliance, said the results announced yesterday, although “satisfactory“…”still fall short of Nissan’s potential because of its manufacturing capacity, management and competitive standing,”
This means pursuing profitable growth opportunities, focusing relentlessly on quality and enhancing our sales power.
In Japan as whole, sales have grown by 9 percent for the auto industry- as consumers tried to beat a sales tax rise kicking in April 1. Here at Study Driving, we believe that the Japanese still make the best cars for ordinary everyday drivers, and so are confident of continuing success!