Nissan Predicts $4.5 Billion Operating Loss
Based on Mitsubishi’s bleak assessment of its own future, you might have thought it would be the automaker winning this week’s award for saddest economic forecast. But Nissan refused to be outdone. Having already warned the world that 2020 would prove harrowing even before anyone heard the term “COVID-19,” the brand now predicts an operating loss of 470 billion yen ($4.5 billion USD).
Nissan likewise estimates total revenue declining by one-fifth through year’s end to 7.8 trillion yen ($74.1 billion) as its worldwide vehicle sales continue a longstanding retreat.
While it’s difficult to know what to peg these losses on, there are a few obvious suspects. Both automakers sacrificed their identities as automakers in order to spend years trying to expand globally, with a particular focus on developing countries and bland models assumed to have mainstream appeal. Nissan even re-launched the Datsun name as an affordable alternative in places like India, but it wasn’t the sales success the company envisioned.
Nissan is supposed to focused on delivering new product and eliminating fixed costs wherever possible. General and administrative expenses will be a large part of that, in addition to the company’s advertising budget. The company knows it’s bloated, but doesn’t want to lessen the role of the pandemic, which remained front and center in its financial reporting.
Given the continuing effects of COVID-19 on the global market, Nissan expects a lower business volume in fiscal year 2020. Nissan forecasts global total industry volume to decrease 16 [percent] from a year earlier to 72.04 million vehicles. For the full year, Nissan’s global retail volume is expected to decline 16.3 [percent] to 4.125 million vehicles, on par with the market trend. The company expects its global market share to achieve 5.73 [percent] which is the same level as previous fiscal year.
Nissan was pretty blunt about what happened. It acknowledged things weren’t playing out in China as hoped — sales fell 39.9 percent in the January-March period to roughly 207,000 vehicles. However, no automaker really had a great first or second quarter this year, with the brand optimistically noting that it actually bumped up its market share in the region by half a percent. Japan saw similar losses, with volumes shrinking by around 33 percent. Meanwhile, U.S. sales fell by 49.5 percent to 177,000 vehicles.
Nissan hopes the next-generation Rouge will help turn things around as the economy gradually improves.
[Image: Memory Stockphoto/Shutterstock]
Join the conversation
Latest Car ReviewsRead more
Latest Product ReviewsRead more
- Max So GM will be making TESLAS in the future. YEA They really shouldn’t be taking cues from Elon musk. Tesla is just about to be over.
- Malcolm It's not that commenters attack Tesla, musk has brought it on the company. The delivery of the first semi was half loaded in 70 degree weather hauling potato chips for frito lay. No company underutilizes their loads like this. Musk shouted at the world "look at us". Freightliners e-cascads has been delivering loads for 6-8 months before Tesla delivered one semi. What commenters are asking "What's the actual usable range when in say Leadville when its blowing snow and -20F outside with a full trailer?
- Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
- William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.
- Tassos The Euro spec Taurus is the US spec Ford FUSION.Very few buyers care to see it here. FOrd has stopped making the Fusion long agoWake us when you have some interesting news to report.
Nissan sales are in the toilet like never before right now too and they are in panic mode. All they can rely on is fast tracking new product, at least that's what got Chrysler through it 10 years ago.
A few billions? It is just a fraction of how much GM and Ford usually loose each year and they are still here with us.