By on November 6, 2012

All three major Japanese automakers have reported their half year financial results. After Honda last week and Toyota yesterday, Japan’s number two automaker Nissan followed today. The presentations could not have been more different.

After the world had seen Japanese cars upended and dealerships torched in China, and  after Honda had cut its profit forecast for the fiscal year to March by more than a billion dollars due to a drastic drop in China sales, observers expected other Japanese majors to follow suit. Yesterday, Toyota did the opposite and upped its profit forecast for the current fiscal by a few billion yen. Today at Nissan in Yokohama, it was back to the brutal realities.

In the first half, Nissan delivered operating profit of 287 billion yen ($3.61 billion), and a net profit of 178.3 billion yen ($2.25 billion), 2.8 percent lower than in the same period of the previous year.

The full impact of the islands row hit after the books were closed. In its guidance for the full fiscal year that ends on March 31, 2013, Nissan expects a net income of 320 billion yen (US $4 billion). Like Honda, Nissan lopped a full billion off what Nissan COO Toshiyuki Shiga called a “very conservative, worst case scenario” forecast. Along with the financial forecast, Nissan also lowered its projected sales by 270,000 units to slightly over 5 million, 175,000 of those due to China.

Other than Toyota’s presentation, where China received a few passing mentions, Nissan’s conference was all about China. Shiga said the showroom traffic is picking up again and that orders are returning. He has “seen improvements to about 70 percent of normal.” 30 percent less than normal is seen as an improvement over past weeks, where showrooms were near empty.

Nissan’s formerly ambitious growth plans in China definitely have been stunted.  Nissan had been running on an annualized clip of 1.17 million units for China, and had hopes for more. Now, Nissan is trying to maintain last year’s level of a little more than 800,000 units, Shiga says.

Why do the fallouts of the China row hit Nissan and Honda in the solar plexus , while eliciting little more than a la-di-da from Toyota?  Of the three Japanese majors, Toyota has the smallest exposure to China, and where one does not have much, not much can be lost. On the other hand, one cannot shake the impression that Toyota is whistling a bit in the dark.

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3 Comments on “Nissan Prepares For The Worst In China...”


  • avatar
    Type57SC

    Does it have anything to do with Toyota treating the chinese sales as a separate company not wholly owned (equity method)? Maybe Toyota is doing one of the classic play of not answering the real question and instead giving a technically correct answer and forecast based on “all known information” for their operations.

    • 0 avatar
      mike978

      I agree that that is why I asked a related question in yesterdays article by Bertel.

      http://www.thetruthaboutcars.com/2012/11/toyota-half-year-results-china-problem-what-china-problem/#comments

      “Joint venture sales are outside the scope of the consolidated results,” explained Ozawa to the inquiring reporter. Translation: Production, sales, and even financial results of the Chinese joint ventures remained unmentioned.
      Then why would people expect Toyota to have made less money than last year (when they had earthquake issues) or make less cars? Wouldn`t the Chinese torching of Japanese cars would affect the JV’s rather than Toyota directly?

      • 0 avatar
        Type57SC

        Yes, that’s my question. Although it will hit them in the end in the form a lower equity income below Operating Income. It’s not like Toyota to miss the chance to lower expectations and I can’t imagine them allowing a miss in earnings.

        In the US, they are picking up tons of share, but also getting into a lot of fleet, so I imagine that most of their overperformance in north america.


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