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Nissan Motor is cutting a future target for China car sales by about 8 per cent, people familiar with the matter said, signalling that the downturn in the worlds biggest car market may be an extended one.
Nissan and Dongfeng Motor Corp now forecast that their joint venture will sell 2.39 million vehicles in 2022, the end of the current mid-term plan. That’s a reduction of 220,000 units from the previous target of 2.61 million, the people said, asking not to be identified because the information isn’t public. Including imports, they sold a total of 1.56 million vehicles in China in 2018, an increase of 3.4 per cent.
The revised outlook underscores mounting challenges for automakers in China. Passenger vehicle sales in the country fell 6 per cent to 22.7 million units last year, the first decline since the early 1990s, while ongoing trade tensions with the U.S. threaten to dampen demand even further. China was a key priority for Carlos Ghosn, the former chairman of Nissan and its alliance with Renault SA and Mitsubishi Motors Corp., before he was charged with falsifying financial information and breach of trust late last year. Ghosn, who was freed on bail earlier this month, has denied the charges.
Nicholas Maxfield, a spokesman for Yokohama-based Nissan, declined to comment on the new targets. A spokesperson for Wuhan, China-based Dongfeng Motor Corp said the company didn’t have any immediate comment.
While Nissan Chief Executive Officer Hiroto Saikawa remains committed to China, he is embarking on a program to put profitability before growth, said the people. Saikawa has criticised Nissan’s business model of offering incentives and sacrificing profits for market share in the U.S.
Nissan’s mid-term plan calls for an operating profit margin of 8 per cent on revenue of 16.5 trillion yen by 2022, with China contributing almost a third of revenue. Ghosn had pledged to invest $9 billion and introduce a slew of new electric vehicles, as Nissan vies with global rivals including Volkswagen AG and General Motors Co. to become the largest electrified vehicle maker in the country.
Drivers in China buy one of every two EVs sold globally, and every manufacturer there must meet strict output targets for new-energy vehicles or buy credits from rivals as the government moves to phase out gas guzzlers.
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