Nissan Motor has revised its annual operating profit estimate downward by 14.5%, citing lower-than-expected vehicle sales and other factors. The company, Japan’s third-largest automaker by volume, now anticipates an operating profit of 530 billion yen ($3.43 billion) for the fiscal year that ended in March, down from the previous estimate of 620 billion yen. Net profit is now expected to reach 370 billion yen, down from the initial forecast of 390 billion yen.
The automaker stated that its vehicle sales would total 3.44 million units for the year, a reduction from the revised estimate of 3.55 million units announced just two months ago, partly due to a disappointing performance in China.
During a press conference, CEO Makoto Uchida attributed the sales downturn to various factors, including intensifying competition in the U.S. market, the New Year’s Day earthquake on Japan’s Noto peninsula, and disruptions to shipping in the Red Sea.
Uchida also noted that Nissan’s quarterly sales performance was impacted by unexpectedly strong demand for hybrids in the U.S., a trend that has particularly favored rival Japanese automaker Toyota.
The profit forecast downgrade was partially attributed to Nissan providing support to suppliers. Uchida explained that this decision was made after realizing that achieving the original sales targets for some models would be challenging, according to the latest update to its mid-term business plan.
He clarified that this support was unrelated to Japan’s fair trade watchdog, which recently accused Nissan of violating the subcontractor act by underpaying 36 suppliers by approximately 3 billion yen over a roughly two-year period starting from January 2021.
Despite the revised profit forecast, Nissan’s expected full-year operating profit for the fiscal year that just ended would still represent a 40% increase over the 377 billion yen profit recorded in the previous fiscal year ending March 31, 2023.
