For last fiscal year, Nissan profit dropped below that of French partner Renault for the first time in a decade.
Nissan’s operating profit sank 45% to 318.2 billion yen ($2.91 billion) for the year ended in March, earnings released show — less than the 3.61 billion euros ($4.06 billion) reported by Renault for 2018.
It also logged the smallest operating margin of the alliance’s three members, at 2.7% to Renault’s 6.3% and Mitsubishi Motors‘ 4.4%.
According to agency report, Nissan’s troubles last fiscal year stem mainly from the U.S., a massive market accounting for 30% of global auto sales. Faced with competition from rivals such as Toyota Motor and General Motors, Nissan offered deep discounts to move more units, but these incentives proved costly. The automaker racked up over $4,000 in promotional costs per vehicle sold, 10% more than the U.S. average.
Discounts became the norm under former Chairman Carlos Ghosn, with his focus on volume above all else. This both cut into margins and cheapened the brand’s image, creating a vicious cycle of deterioration. Nissan’s operating profit margin in North America sank 1.9 percentage points to 1.2% last fiscal year.
For fiscal 2019, Nissan expects group net profit to tumble 47% to 170 billion yen. That would represent its worst performance since fiscal 2009, in the aftermath of the global financial crisis.
