Nissan, one of Japan’s major automakers, recently reported a significant decline in profit for the April-June quarter and lowered its full-year outlook as a result. The company’s CEO, Makoto Uchida, described the results as “very challenging,” attributing the decline to sales incentives and marketing expenses stemming from intense competition, particularly in the U.S. market. These factors caused Nissan’s stock price to plummet nearly 7% on the Tokyo Stock Exchange.
Despite these profit challenges, Nissan’s global vehicle sales remained steady at 787,000 units. Quarterly sales also saw a slight increase of 3% to 2.99 trillion yen ($19.6 billion). However, the need to optimize inventory took a toll on profitability, with Nissan’s first-quarter profit declining to 28.6 billion yen ($187 million) from 105.5 billion yen the previous year.
In response to these difficulties, Nissan has implemented measures to recover, with the aim of improving inventory and boosting sales and profits in the second half of the fiscal year. The company also plans to introduce new models, including the Altima sedan, Z sports cars, and Infiniti luxury models. Despite these efforts, Nissan lowered its full-year profit forecast from 380 billion yen ($2.5 billion) to 300 billion yen ($1.9 billion).
Nissan’s struggles are not unique; the global auto industry is currently undergoing turmoil due to shifting consumer preferences and growing concerns about sustainability and the environment. As consumers increasingly turn to electric vehicles (EVs), fuel cells, and other green models, established automakers face risks while newcomers, such as various Chinese manufacturers and Tesla, stand to gain opportunities.
The performance of Japanese automakers in key markets, such as the U.S. and China, has been particularly affected by these changes. Nissan, which has been focusing on a sales growth strategy centered around EVs called “The Arc,” is grappling with the effects of this shift. However, the company remains optimistic about the future and promises to mass-produce EVs powered by next-generation batteries by early 2029.
The challenges faced by Nissan underscore the need for established automakers to adapt and innovate in response to changing consumer demands. As the industry continues to evolve, the use of artificial intelligence and other technologies for safer and cleaner driving will become increasingly important. With Toyota and Honda set to report their financial results in the coming weeks, the spotlight remains on how these industry giants will navigate the changing landscape. Ultimately, the ability to embrace sustainability and technological advancements will determine the success of automakers in the years to come.
