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Old 05-15-2019, 07:55 AM   #1
AVANTI R5
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Default Nissan Sales And Profits Are Dropping Like A Rock And Still Have Further To Go




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Nissan CEO expects profits to hit 'rock bottom'

YOKOHAMA, Japan – Nissan Motor Co. CEO Hiroto Saikawa warned the company’s earnings will drop to “rock bottom” before improving but outlined plans to restore global operating profit margin to 6 percent and reboot the flagging U.S. business.

Saikawa’s dour outlook came Tuesday as Japan’s No. 2 automaker reported a 45 percent plunge in operating profit in the fiscal year ended March 31. Net income dropped 57 percent.

And Saikawa, battling to reform Nissan in the wake of a corporate governance scandal triggered by the arrest of former Chairman Carlos Ghosn, pulled no punches about the outlook.

Operating profit will fall by another 28 percent to 230 billion yen ($2.08 billion) in the current fiscal year ending March 31, 2020, while net income almost halves again, dropping by 47 percent to an expected 170 billion yen ($1.53 billion), Saikawa said. Operating profit margin will dwindle to 2 percent, from 2.7 percent in the just-ended fiscal year.

“We would like to hit rock bottom in 2018 and 2019 and reverse the trend in the following years,” Saikawa said during a media briefing on the company's financial results.

“Now is the time to take bold action,” Saikawa said.

Looking ahead, Saikawa promised things will improve by the fiscal year ending March 31, 2022. But he also scaled back initial targets for that period.


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Recovery plan

Nissan now wants operating profit margin to recover to 6 percent by then, rather than the previous goal of 8 percent. Saikawa is also targeting revenue of 14.5 trillion yen ($130.84 billion) in that span, down from an earlier goal of 16.5 trillion yen ($148.89 billion).

In the just-ended fiscal year, Nissan’s revenue slid 3.2 percent to 11.57 trillion yen ($104.40 billion), as global retail sales volume declined 4.4 percent to 5.52 million vehicles.

To boost results, Nissan is embarking on a restructuring program that will cut 4,800 workers worldwide in an effort to generate cost reductions of 30 billion yen ($270.7 million).

In the critical U.S. market, Nisan wants to restore retail volume to a level around 1.4 million vehicles, from around 1.35 million it expects in the current fiscal year.

U.S. operating profit margin stands around 1 percent to 2 percent, Saikawa said. He wants to lift that by 5 percentage points by slashing fleet sales and incentives.

“We want a recovery in the U.S. operation, which used to be a big source of profit,” he said. “In the past, we overstretched to grow our business. Such surgery should be done fast.”

Nissan had warned that results would be ugly.

In April, the Japanese carmaker slashed its profit outlook for the second time in two months, partly due to quality problems. Nissan blamed the twin problems of falling sales and rising warranty costs in the U.S. market, the carmaker's traditional profit center.

Profit hit

As part of the full-year report, Nissan also booked a 9.23 billion yen ($83.3 million) charge for the deferred compensation allegedly owed Ghosn.

That amount, covering the 2009-2017 fiscal years, is the crux of two of the four indictments against the former chairman, who is free on bail in Japan.

In those cases, prosecutors accuse Ghosn of falsifying official company financial filings by failing to report the income as a future liability against the company.

Ghosn maintains his innocence saying the compensation in question was neither finalized, nor disbursed. Therefore, he argues, there was no obligation to report it.

Like its Japanese rivals, Nissan is being buffeted by slowing demand in the key markets of the U.S. and China, as well as by uncooperative foreign exchange rates.

The Japanese yen’s appreciation against the U.S. dollar and other currencies took a 65.4 billion yen ($590.1 million) bite out of operating profit in the just-finished fiscal year, while rising costs for raw materials and tariffs dented results by 84.7 billion yen ($764.3 million).

Higher investment in product and technology depressed results by 60.5 billion yen ($545.9 million).

And high quality outlays and deteriorating sales performance combined to cut another 46.0 billion yen ($415.1 million), hurt by sliding sales in North America and Europe.

Nissan faces the additional headwind of trying to reposition the brand in the U.S. to move it away from its discount image by reining in incentives and fleet sales. Executives have said improved profitability is taking more time and money than expected as it struggles to cut back marketing expenses at a time when demand has peaked and customers are seeking deals.

To reduce costs in North America, Nissan said in January that it would eliminate some production shifts at its plant in Canton, Miss., requiring the elimination of about 700 contract workers there. Those measures are now complete and ultimately required 381 contract worker layoffs. The company additionally eliminated about 1,000 jobs at its plants in Mexico during the first three months of this year.

Patience please

In the crucial North American market, regional operating profit sunk 64 percent to 72.1 billion yen ($650.6 million) in fiscal year, as retail volume slid 9.3 percent to 1.90 million vehicles.

Saikawa called for more patience with what he calls the “normalization of sales.”

Nissan Group retail sales in the U.S. declined 6.3 percent to 1.49 million vehicles in calendar year 2018 in an overall market up 0.6 percent. The group’s U.S. volume fell 12 percent in the first three months of 2019, worse than the overall market’s 3.2 percent retreat.

Saikawa is trying to pivot the company away from profit-draining fleet sales and incentives in the U.S. in an attempt to shore up brand value and margins.

Saikawa has said Nissan is prepared to sacrifice some volume to bolster margins. Early last year, the company began pulling back fleet deliveries, culling bloated inventories and easing pressure on dealer sales-incentive programs, even as the U.S. light vehicle market softens.

In the January-March period, average spiff spending on Nissan and Infiniti brand cars by Nissan North America Inc. dropped 6.1 percent to $3,750. But outlays were still above the industry average of $3,574 per vehicle, according to figures from Autodata Corp.

Average industry outlays declined 4.6 percent in the quarter.

The Nissan brand’s incentives fell 8.5 percent in the January-March quarter, from a year earlier, to an average of $3,393 per vehicle. Average spending at Infiniti increased 8.8 percent to $7,192, according to figures from Autodata Corp.

By contrast, average U.S. spiffs at Japanese rivals Toyota, Honda, Mazda, Subaru and even Mitsubishi were all below Nissan’s in the January-March period. Each of those makers, with the exception of Honda and Subaru, also managed to dial back incentive spending in the quarter.

Blaming Ghosn

Saikawa blamed Nissan’s dire balance sheet on the strategies of his predecessor Ghosn.

He said Ghosn recklessly pursued volume by stoking sales with incentives and fleet sales and neglected investment in new product for key markets such as the U.S. by diverting funds into plants and a new Datsun brand for emerging markets.

That has now saddled Nissan with worldwide overcapacity at its factories, Saikawa said.

“Most of the problems that I presented today are the negative legacy coming from the old leadership,” Saikawa said. “We would like to make recover happen as soon as possible.”

Ghosn, who saved Nissan from the brink of bankruptcy in 1999 and combined it with Renault and Mitsubishi into the world’s largest automotive group, sees it differently.

In a video message recorded last month, the day before he was sent back to jail following his fourth arrest, Ghosn blasted Nissan for “absolutely mediocre” performance. He cited a string of profit warnings, declining share price, lack of leadership and “many scandals.”

“For somebody like me, it’s sickening,” Ghosn said, decrying Nissan’s current state.

Indeed, before his first arrest on Nov. 19, Ghosn was so disenchanted, he even planned to remove Saikawa as CEO, people familiar with his plans told Automotive News in December.

But Nissan was already in a downward trajectory during Ghosn’s last year as CEO, when he shared leadership with Saikawa. Operating fell 6.4 percent in the fiscal year ended March 31, 2017, and Ghosn missed both headline targets of his Power 88 mid-term business plan.

Operating profit margin came in at 6.9 percent, instead of 8 percent. And global market share actually declined to 6.1 percent that year, instead of expanding to the targeted 8 percent.

Nissan’s share price is down. But its biggest slump came in the wake of Ghosn’s arrest.
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Old 05-15-2019, 08:33 AM   #2
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Their flag ship models are 10+ years old and their finish quality(based on my brand new Titan) is pathetic. I feel no pity for Nissan. I paid $35+ for a brand new truck and the tailgate has rust spots bleeding through after 4 months.
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Old 05-15-2019, 09:18 AM   #3
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Their cars are pure **** compared to most of the competition. The Sentra and Versa are two of the of the worst cars available in the world. I had a Sentra rental car for a couple of days last year and returned it for a different car as it was so substandard I felt it wasn't worth a rental fee. Easily the worst car I have driven in decades. The Altima has been a good seller for them but as said above it's more or less the same car going back to last decade with refreshes. They are getting by on the fact that they have a lot of different SUV offerings which sell based on the fact that they are SUV's and not that they are great. When was the last time Nissan supplied anything that was class leading or even in that conversation? Japanese Chrysler is Japanese Chrysler and it's a shame because in the 90's the Maxima was a great car as was the 300ZX and Sentra but they stopped putting money into engineering and quality last decade and it shows in how outdated their vehicles are today as they are essentially serving up Japanese K-cars.
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Old 05-15-2019, 09:53 AM   #4
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I wonder if the company is getting by on Rogue sales alone.

I was so disappointed when they badge engineered their entire SUV line.

All they did was move the badges up the line

Old - New
Rogue - Rogue Sport/Kicks
Rogue - Murano
Murano - Pathfinder
Pathfinder - Bigger Pathfinder
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Old 05-15-2019, 10:15 AM   #5
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Such a shame that Mazda has actually put in a lot of effort to deliver solid product offerings and they can’t make any market traction and Nissan sells a lot of vehicles today based on products that would be considered substandard by the Kia.
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Old 05-15-2019, 10:53 AM   #6
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Quote:
Originally Posted by mhoward1 View Post
I wonder if the company is getting by on Rogue sales alone.

I was so disappointed when they badge engineered their entire SUV line.

All they did was move the badges up the line

Old - New
Rogue - Rogue Sport/Kicks
Rogue - Murano
Murano - Pathfinder
Pathfinder - Bigger Pathfinder
Im guessing so.

On TV, every other commercial is a Nissan one. Their marketing in New England is huge.
Too bad their cars suck, to the point that I thought a Camry was a much better car than their Altima, by a lot.
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Old 05-15-2019, 10:56 AM   #7
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When was the last time Nissan actually released an entirely new platform, though? I feel like their entire lineup is aged cars that they keep doing mild refreshes on. They need to step their game up and actually build something brand new. Mazda did it and did it well.
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Old 05-15-2019, 01:01 PM   #8
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Most everything they have is old, New Rogue and Murano but most of the rest is in segments that don't matter or just very dated with lower than average reliability. Why would you chose Nissan over the the other Japanese makes or Koreans, over Mitsubishi sure but no one else.
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Old 05-15-2019, 01:15 PM   #9
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Well, the Rogue is the best selling non-truck vehicles right now. Overtook the RAV4 recently.

Its the only Nissan in the top 20 as far as a know.
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Old 05-15-2019, 02:47 PM   #10
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Quote:
Originally Posted by Genericuser1 View Post
Most everything they have is old, New Rogue and Murano but most of the rest is in segments that don't matter or just very dated with lower than average reliability. Why would you chose Nissan over the the other Japanese makes or Koreans, over Mitsubishi sure but no one else.
because nissan caters to the 530 credit score crowd.
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Old 05-15-2019, 02:59 PM   #11
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Quote:
Originally Posted by n2oiroc View Post
because nissan caters to the 530 credit score crowd.
I believe it. Without turning this too much into a PP discussion, Nissan has a HUGE presence in Los Angeles and the vast majority of their target demographic are folks who...how do I put this nicely...have made some really poor life choices, especially financially.
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Old 05-15-2019, 02:59 PM   #12
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Quote:
Originally Posted by n2oiroc View Post
because nissan caters to the 530 credit score crowd.
This is fact, lol. I think they offer a lot of 0% for 72 months type of deal also. Everything goes in cycles, one day Nissan will be cool again.
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Old 05-15-2019, 03:05 PM   #13
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We bought our then new 2012 Murano because the sale was so good we could just pay cash. It was well loaded too, more than it's Infiniti Counterpart.
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Old 05-15-2019, 03:14 PM   #14
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How are the Infiniti vehicles? I have to admit, the past few Infiniti model years look pretty good.
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Old 05-15-2019, 03:16 PM   #15
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Q50 Red Sport 400 looks amazing. Weird naming though. I can't comment on how they perform or drive but echo your sentiments that they do look pretty awesome.
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Old 05-15-2019, 03:25 PM   #16
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For what it is, everything on our Leaf is solid. I actually commented to the wife when I was driving it home that the turn signal stalk feels like it's a quality piece. Odd, I know, but it's a touch point that gets heavy use.

The rest of the line up, I have no idea. It was the only car they offer that we were even remotely interested in.
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Old 05-15-2019, 03:41 PM   #17
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Our Murano has been dead reliable and the now 7 year old infotainment center is still better than some new ones
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Old 05-15-2019, 04:43 PM   #18
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bring back the 240sx

250sx-r?
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Old 05-15-2019, 04:45 PM   #19
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This doesn't really count, but I have a VQ35DE in my S14 240sx endurance racing car and it has been stupid reliable after 5 years of thrashing the crap out of it. VQ37VHR is next on the list for reliability testing starting next year The 37 is one of the last great, underrated NA engines left. The issue is that it's in a heavy pig of a 370Z. At least they sound glorious (to me).
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Old 05-15-2019, 05:13 PM   #20
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Their business model is predicated on building boring ****ty cars at a minimum of investment and selling them to underqualified buyers who aren’t intelligent enough to see what POSes they are. Considering they have several models that are 10+ years into their development cycle and it’s pretty clear they’re trying to do as much as possible by investing as little as possible into their products.

Quote:
I believe it. Without turning this too much into a PP discussion, Nissan has a HUGE presence in Los Angeles and the vast majority of their target demographic are folks who...how do I put this nicely...have made some really poor life choices, especially financially.
About a decade ago, I was with my ex when she bought a new Altima from a dealership in the ghetto of St. Louis. The stories the salesman had were pretty eye opening. People that would test drive cars around to different dealerships until they found one that would finance them. He said he had to return other dealerships' test driven cars more than once. And the typical people that would come in everytime they had the bare minimum of equity built up in their nearly new car and trade it in on another new car and finance a **** ton of negative equity. Poor life decisions is a great way of putting it.
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Old 05-15-2019, 05:20 PM   #21
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Quote:
Originally Posted by FaastLegacy View Post
About a decade ago, I was with my ex when she bought a new Altima from a dealership in the ghetto of St. Louis. The stories the salesman had were pretty eye opening. People that would test drive cars around to different dealerships until they found one that would finance them. He said he had to return other dealerships' test driven cars more than once. And the typical people that would come in everytime they had the bare minimum of equity built up in their nearly new car and trade it in on another new car and finance a **** ton of negative equity. Poor life decisions is a great way of putting it.
I'm amazed every day at how many dealership commercials I hear on the radio every day - and yes I listen to regular FM peasant radio. Every commercial break there is always at least one dealership pitching something that sounds absurd.

My favorite is one that boasts about the fact that they are their "own bank" so they can finance who they want to, and that they'll finance you even if you have bad credit, no credit, or EVEN if you've previously had a car repo'd!

Don't even want to think about the can of worms that comes with that...
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Old 05-15-2019, 07:04 PM   #22
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As a owner of a 2010 Nissan it'll be the last one we own. The interior is GARBAGE and they haven't upgraded it having recently seen a Frontier. The same tired platforms go on and on.

Mesh the boring-ness with lack-luster dealer experiences and there's not a single reason to own anything other than a cheap GT-R.

I've sat in a recently leased Rogue which was fully optioned. The only good thing about it is you get to give it back after 3 years.

You can drag out platforms and do "boring" well. Nissan just decides to drag them out.
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Old 05-15-2019, 07:25 PM   #23
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Quote:
Originally Posted by [email protected] View Post
As a owner of a 2010 Nissan it'll be the last one we own. The interior is GARBAGE and they haven't upgraded it having recently seen a Frontier. The same tired platforms go on and on.

Mesh the boring-ness with lack-luster dealer experiences and there's not a single reason to own anything other than a cheap GT-R.

I've sat in a recently leased Rogue which was fully optioned. The only good thing about it is you get to give it back after 3 years.

You can drag out platforms and do "boring" well. Nissan just decides to drag them out.
At least on the sales side, my experiences with Nissan have both been stellar.

First one was apologetic because the cookies were still in the oven and wouldn't be ready for another 5 minutes (she hunted us down in the parking lot and brought us all warm cookies)

The other one we hit up on a Sunday at opening, probably would have been better with full staffing, but they were nice and got us taken care of.
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Old 05-15-2019, 07:30 PM   #24
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I'm so happy our Rogue is going back to Nissan next Saturday. I will probably never buy/lease another one.

Its had random electrical issues throughout the 3 years we've had it.
it doesn't do well in the snow at all
the CVT in it is horrible. its starting to slip and it has 44k miles
the Engine is loud as hell and very underpowered
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Old 05-15-2019, 08:14 PM   #25
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Originally Posted by Waddlz View Post
I'm so happy our Rogue is going back to Nissan next Saturday. I will probably never buy/lease another one.

Its had random electrical issues throughout the 3 years we've had it.
it doesn't do well in the snow at all
the CVT in it is horrible. its starting to slip and it has 44k miles
the Engine is loud as hell and very underpowered
lolz... I hear a lot of the same from many current/previous Rogue owners. What you gonna get next?
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