News about Nissan keeps getting worse. Nissan just reported a 70% plunge in profit so far this quarter. The Japanese manufacturer says it is seeing more sales in the US but overall sales and profit are way down.
Global sales fell 7.5% in the third quarter and overall income dropped by more than half to $546.8 million. In Europe, sales fell almost 25% to only 130,000 vehicles. Even with Nissan reducing marketing and advertising expenses globally by $186 million was killed by the $177 million hit from reduced sales.
Corporation In Shambles
The corporation has been in shambles since its former chairman Carlos Ghosn was arrested for “financial misconduct.” Parent company Renault has a 43% stake in Nissan, and relations have been bad between the two for several years. New CEO Makoto Uchida has vowed to improve relations.
In the US, Corporate Vice President Stephen Ma says corrections have improved business. He says incentive costs are better controlled and dealer inventories have been reduced. “Nissan is already starting to see improved quality of sales in the US, which is our primary focus right now,” he says. “We are not chasing market share and are not chasing volume. We are really focused on sustainable long-term growth.”
Profit Plunge From Fleet Sales And Discounts
One of Nissan’s problems in the US has been discounting and a push for fleet sales. All of this was in an effort to prop up sales demands being pushed internally. But the glut of fleet vehicles has cheapened the brand and significantly lowered resale values. It also meant less profit from those sales.
New Models-Where Are They?
The elephant in the room is the lack of new models, especially in regards to pickup trucks and SUVs. Pickups are where the profit is. Sure, the Murano crossover is new this year, but the rest of Nissan’s and trucks are old-especially the trucks. Though scheduled to be replaced, the midsize Frontier pickup has been around for 15 years with minor updates and facelifts. Its full-size Titan pickup was first introduced in 2003 as a 2004 model.
That’s just too long of a life cycle, especially in a segment as hot as pickup trucks. As the Armada SUV is truck-based it has changed little over the last dozen years. While trucks in other countries were viewed as needing fewer changes year-to-year to increase sales, that is not the case in the US. Even a new body on an existing chassis would give the impression the entire truck is new, which would significantly improve marketing and advertising.
Nissan Needs New Models
While Nissan should be commended for having one of the first EVs with the Leaf, it began to lag behind the competition until recently when a new version was finally introduced. The 370Z is another case of Nissan dragging out a model’s life cycle. It has been unchanged since 2008 and was first seen in 2006. Though the 370Z is more of a niche vehicle it drives traffic to showrooms and has a halo effect.
In 2020 Nissan has a series of launches that include both the Frontier and Titan pickups. They can’t come soon enough for the ailing company.