TOKYO — Nissan is having a “performance crisis.”
That's what the Japanese automaker's president, Carlos Ghosn, said today after Nissan slashed its annual forecast and reported a 22 percent slump in earnings from October through December.
“We have today a performance crisis and we need to fix it as soon as possible,” president and chief executive Ghosn told reporters in Tokyo in a conference call from Paris. “We don't take this lightly … it's really an interrogation for us, about our management ways.”
Japan's No. 3 automaker by global vehicle production, said net income fell to $870.8 million in the fiscal third quarter.
The drop forced the Tokyo-based company to cut its profit forecast for the fiscal year through March by 12 percent to $3.83 billion. If realized, it would be Nissan's first annual profit decline in seven years.
Sales climbed a meager 1.8 percent from a year earlier to$19.5 billion on a 3 percent fall in unit sales to 795,000. The company also warned that it is falling behind its full-year sales target of 3.7 million vehicles.
The woes at Nissan, which is 44 percent owned by Renault SA of France, underlined the diverging fortunes of the automaker and its archrivals Toyota Motor Corp. and Honda Motor Co., which have both notched up record earnings while boosting market share in the United States and elsewhere.
It was also the first time that Ghosn — who became a celebrity in Japan for his turnaround of an automaker that was once on the brink of bankruptcy — has faced tough questions about the company's outlook.
Nissan recently ceded its spot as Japan's second-largest automaker to Honda, and has struggled to boost profits amid sagging sales. A lack of new models hurt U.S. sales and compounded wider problems such as tough competition and spiraling commodity costs.
In the first half of the fiscal year, Nissan launched just one of 10 new products scheduled for the market. It rushed out six more in the third quarter, but the company conceded the move came too late.
Unit sales in the United States, the company's most important market, inched up just 0.9 percent to 243,000 vehicles in the latest quarter, but were still down 6.9 percent in the first nine months. Sales in Japan and Europe, Nissan's next two biggest markets, were down both in the quarter and for the first nine months.
Still, Brazilian-born Frenchman Ghosn, who became the first foreigner to head a Japanese automaker when he took over Nissan's top job in 1999, said the company was bolstering its vehicle lineup and expected a quick return to profit growth.
“We are expecting 2007 to be better than 2006, in terms of growth, profit, and net income. The question is how much better,” Ghosn said. “If Nissan is not capable of growing with this product pipeline, then the situation is really tragic. This we don't think.”
He added that neither Nissan or French automaker Renault SA, of which Ghosn is also chief executive, would rush to form alliances with other automakers.
In a bid to strengthen their global market position, Nissan and Renault entered talks with Detroit-based General Motors Corp. about forming a three-way alliance last year. But the talks came undone after Nissan and Renault declined to pay a premium for reaping what GM said would have been a disproportionate share of the benefits.
“We are not going to deviate any of our attention or energy outside,” Ghosn said. “We want to re-establish the growth in profit and sales for Nissan, and establish a good pattern of growth at Renault, before envisioning anything else.”
For the first nine months combined, Nissan's net income rose 3.5 percent to $3.16 billion. Sales by value edged up 1.2 percent to $57.3 billion.
