Nissan to boost Japan output to 1M cars as net gains

Ma Jie and Masatsugu Horie
Bloomberg News

Nissan Motor Co. plans to build more than 1 million vehicles in Japan next year for the first time since 2013, as the weaker yen boosts earnings from exports.

Domestic production may rise even higher in 2017, Chief Executive Officer Carlos Ghosn told reporters Wednesday in Yokohama, Japan. The company’s output in Japan last year fell 8.7 percent to 880,887 vehicles.

Nissan on Wednesday forecast a third straight year of rising profit after the weaker Japanese currency, along with demand in major markets such as the U.S., helped net income jump 18 percent last fiscal year. While the carmaker’s sales in Japan are falling, building more cars at home for export will allow Nissan to take even greater advantage of a 15 percent decline in the yen against the dollar in the past year.

“We are going to increase these capacities in Japan, which is good for the country,” Ghosn said in an interview in Yokohama. “The government is expecting that making the yen a little bit more competitive will somehow draw workload to Japan, and it’s working.”

Net income rose to 457.6 billion yen ($3.8 billion) in the year ended March and will probably increase by 6 percent to 485 billion yen in the current fiscal year, the company said in a statement Wednesday.

Nissan overtook Honda Motor Co. to become the fifth largest automaker in the U.S. this year and is expecting new models such as the Titan pickup truck and Maxima sedan to further boost sales in its largest market.

The company expects unit sales in Japan to fall 3.7 percent in the current fiscal year while global sales may rise 4.4 percent to 5.55 million vehicles. Nissan’s deliveries in Japan fell 13 percent last fiscal year amid intensifying competition in the mini-vehicle segment and a consumer backlash after a rise in the consumption tax in April 2014.

Demand in China, the world’s largest car market, is still healthy although competition is growing and affecting pricing power, Ghosn said. Nissan’s sales in the country may rise 6.4 percent this fiscal year, the carmaker said.

Passenger-vehicle sales in China rose at the slowest pace in five months as weaker economic expansion hurt big-ticket purchases. Nissan sells more vehicles in China than any other Japanese carmaker, and its deliveries there declined in the first four months of this year amid growing competition in the compact-car segment and a slump in commercial vehicle demand.

“The Chinese market is still unclear,” Masahiro Akita, an analyst at Credit Suisse Group AG, said before the earnings announcement. “That’s a concern for Nissan because they have a big exposure to the market.”