Nissan Motor’s Q1 Profit Plummets and Annual Outlook Slashed

Nissan Motor’s first-quarter financial results took a significant hit on Thursday, with nearly all of its profit wiped out due to aggressive discounting strategies in the United States. The company’s results fell well below analyst expectations, causing its shares to drop 7%.

For the April-June period, Nissan reported an operating profit of 995 million yen ($6.5 million), a sharp decline from 128.6 billion yen in the same period last year. This figure also missed the projected 164.4 billion yen estimated by analysts in a poll conducted by LSEG.

The Japanese automaker’s performance in the United States, where it faced steep discounting pressures and high marketing costs, severely impacted its margins. As a result, Nissan has drastically reduced its operating profit forecast for the financial year by 17%, from 600 billion yen to 500 billion yen.

Nissan’s operating profit for this quarter marks its worst performance in over three years. Despite stable global sales at 787,000 vehicles, the profitability of these sales was undermined by increased discounts and marketing expenses aimed at navigating fierce competition and clearing inventory, particularly in the U.S. market.

The disappointing results led to a dramatic fall in Nissan’s share price, which plunged nearly 11% at one point before closing down 7% at 485 yen. This represents the company’s most significant single-day decline since February.

Nissan is now facing heightened scrutiny over its U.S. market strategy, where sales have been affected by an aging vehicle lineup and a shift toward hybrid vehicles. This challenge is compounded by ongoing difficulties in China, where the company is struggling to regain market share against formidable local competitors.

In response to these issues, Nissan plans to optimize inventory management in the U.S. and focus on improving sales quality. The company also aims to boost sales through new and refreshed models, such as the Armada and Murano SUVs, in the latter half of the financial year.

Additionally, Nissan recently halted production at one of its eight factories operated through a joint venture with Chinese partner Dongfeng Motor as part of its efforts to streamline operations and address challenges in the Chinese market.