Nissan could sacrifice market share goal to boost profitability

Mon Feb 10, 2014 9:20am EST
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By Yoko Kubota and Maki Shiraki

YOKOHAMA, Japan (Reuters) - Nissan Motor Co (7201.T: Quote) could sacrifice its global market share goal to reach its mid-term profitability target after slower-than-expected sales in its biggest markets left its profit margin the tightest among Japanese car makers.

Nissan's six-year plan ending 2017, in which it aims to boost its market share to 8 percent from 6 percent, has been shaken by a Sino-Japanese diplomatic dispute knocking sales in China, and manufacturing difficulties hitting U.S. product launches.

Japan's second-largest carmaker by global sales volume after Toyota Motor Corp (7203.T: Quote) also aims for operating profit equivalent to 8 percent of revenue by March 2017 through scaling back buying incentives in the United States and cutting costs with alliance partner Renault SA (RENA.PA: Quote).

Nissan, on reporting an 18.4 percent rise in April-December net profit on Monday, said its nine-month operating margin was 4.1 percent, down from 4.5 percent a year earlier. That compared with 6.6 percent at Honda Motor Co (7267.T: Quote) and 9.7 percent at Toyota.

"If we can meet our 8 percent profitability target, then it is fine if the share is a little lower and the company is moving to emphasize profitability," Corporate Vice President Joji Tagawa told reporters after Nissan released earnings.

Nissan reported nine-month net profit of 274.1 billion yen ($2.68 billion). For October-December, profit rose 56.8 percent to 84.3 billion yen compared with a 57.1 billion yen mean estimate of seven analysts in a Thomson Reuters I/B/E/S poll.

The quarterly net profit growth was the steepest in almost two years as a weaker yen allowed Nissan to convert money made overseas at a more favorable exchange rate, and as sales improved in China where some consumers boycotted Japanese goods following a territorial row in September 2012.

Shares of Nissan ended Monday 0.1 percent higher before the earnings release compared with a 1.8 percent rise in the benchmark index .N225.   Continued...

Nissan Motor's Teana sedan is displayed as pedestrians are reflected in a window at the company's showroom in Tokyo February 10, 2014. REUTERS/Toru Hanai