International brands, including Nissan and other Japanese brands such as Mitsubishi and Toyota, are struggling in China, where they have trailed domestic competitors in meeting booming demand for electric vehicles. Mitsubishi has suspended production in China amid tumbling sales, and Toyota took the rare step this month of laying off 1,000 workers there.
Uchida, in announcing financial results Wednesday for the fiscal first quarter ended June 30, trimmed Nissan’s full fiscal year sales outlook, citing the dire sales decline in the world’s biggest market.
Nissan cut its China sales forecast to 800,000 units for the current fiscal year to March 31, 2024. That is down from an original goal of 1.13 million and represents a 23 percent slide from last year.
Not optimistic
To deal with the decline, Nissan will speed the introduction of so-called new energy vehicles, as full EVs and plug-in hybrids are categorized in China. The rollout will include the July introductions of the Nissan Ariya all-electric crossover and the V-Online plug-in from its Venucia local brand.
“We need to enhance the cost competitiveness and enrich the lineup at the same time. This will determine our survival in China,” Uchida said. “Does this mean that we are optimistic? Not at all. It’s the other way around. We are increasing the sense of urgency.”
If Nissan begins shipping cars from China, Japan’s No. 3 automaker would join a growing group of international manufacturers using the country as a global export base. That trend helped China surpass Japan as the world’s top auto-exporting nation in the first quarter of this year.
Ford Motor Co. said earlier this year that its next-generation Lincoln Nautilus midsize crossover for North America would be exported from China. Tesla ships its Model Y and Model 3 sedans from its Shanghai plant to Europe and is reportedly planning to export the Model Y to Canada.
Stellantis, another big global player foundering in China, has said it will pursue an export strategy from China for its Jeep brand. And other makes including BMW and Renault also ship China-made vehicles back to Europe or to other markets, such as Southeast Asia. Honda has also said it will export three crossover models from China to Europe.
But the biggest exporters from China are domestic brands such as Geely, SAIC and Great Wall.
China exports
Jean-Dominique Senard, chairman of the Renault, Nissan, Mitsubishi alliance, finds the export wave so alarming he warned this month that a “Chinese storm” looms over Europe’s EV sector.
Uchida said Nissan is rapidly filling up capacity at plants in the U.S., Mexico, Japan and Great Britain, as the semiconductor shortage eases. Those markets have unmet demand, he said.
“The capacity utilization rate in China, needless to say, remains low,” Uchida said. “So, for destinations with unmet needs, we are just considering the possibility of exporting.”
Uchida blamed Nissan’s China slump on a domestic price war and on a sudden surge of demand for EVs. Local brands have been quicker to market than their foreign competitors with a plethora of EV product. “The market situation has changed quite dramatically,” Uchida said.
“It’s not going to be easy to regain performance in the Chinese market.”
Despite Nissan’s troubles in China, the company still managed to deliver a doubling of operating profit in the fiscal first quarter ended June 30, thanks to robust business in North America.
Moreover, even though Nissan cut its fiscal year sales forecast to 3.7 million vehicles, from an earlier target of 4.0 million vehicles, it still raised its revenue and operating profit forecasts. The rosier profit performance will ride a tailwind of beneficial foreign exchange rates, Nissan said.
In the April-June period, Nissan’s operating profit nearly doubled to 128.6 billion yen ($889.6 million), while net income more than doubled to 105.5 billion yen ($729.8 million).
Nissan’s global retail sales fell 3.7 percent to 789,000 units. North American volume surged 33 percent to 328,000 vehicles, while deliveries in Japan climbed 19 percent and those in Europe advanced 7.2 percent. But China sales plunged 46 percent to 162,000 vehicles in the quarter.
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