http://www.forbes.com/business/2007/...?partner=topix

Market Scan
Nissan Hits A Wall
Vivian Wai-yin Kwok 02.02.07, 12:31 PM ET

Well, no wonder Nissan Motor was interested in merging with an American automaker. It needs some new ideas for the key U.S. market, where its failure to introduce new car models in its latest financial quarter took a toll on its earnings.

On Friday, the Japanese automaker posted a 22.6% decline in quarterly profit and issued a profit warning.

The revelation came after trading ended in Tokyo, where Nissan Motor (nasdaq: NSANY - news - people )'s shares fell 1.8%, to close at 1,509 yen ($12.57). But the respite is unlikely to last longer than the weekend: in New York, Nissan's American depositary receipts tumbled 8.3%, or $2.12, to $23.44. As each ADR is worth two Tokyo shares, Nissan was trading about 6.8% below its level in Japan.

The damage was not limited to Nissan. Renault (other-otc: RNSDF - news - people ), the French automaker that owns 44% of the Japanese carmaker, fell 4.2%, or 4.00 euros ($5.19) on Euronext, where it ended the day at 91.80 euros ($119.01)

Although Nissan's sales moved up 1.8%, to 2.3 trillion yen ($20.2 billion) in its third quarter, operating profit fell 16.6%, to 183.1 billion yen ($1.6 billion), and net income came down to 104.4 billion yen ($900 million), a 22.6% from the period ending in December 2005.

The decline which came after five consecutive quarters of rising profits, forced the Japan's third-largest automaker to lower its full-year profit forecast by 12%, to 460 billion yen ($3.83 billion).

"We have today a performance crisis, and we need to fix it as soon as possible," Nissan's chief executive, Carlos Ghosn, told reporters in Tokyo on a conference call from Paris.

Nissan�s problem was mostly caused by lack of new models that hurt the sale in the United States. Tough competition and upward material costs further hampered Nissan�s profitability.

In the first half of its fiscal year, Nissan launched only one of 10 new products scheduled for introduction. Although the automaker rushed out six more models, including the Altima, Livina, Geniss and Infiniti G35 in the third quarter, Nissan merely sold a total of 2,504,000 vehicles globally in the first nine months, down 5.7% compared with last year. Although it is accelerating its product-introduction scheduled to debut 11 more new models, the company nonetheless warned that it is falling behind its full-year sales target of 3.7 million vehicles.

Joji Tagawa of Nissan's treasury department said at the press conference in Japan, "Because there were no new models for many months, it was difficult to increase volume or profitability."

While Toyota (nyse: TM - news - people ) and Honda (nyse: HMC - news - people ) have secured the first and second place in the global market, Nissan could have had strengthened its global market position by joining Renault to form a three-way alliance with General Motors (nyse: GM - news - people ). Yet, the 90-day alliance talkathon was finally called off after the parties failed to agree on an independent valuation on the alliance and Nissan and Renault declined to pay a premium over the market price of the American automaker.

The idea of an alliance was first publicly broached in June by billionaire investor Kirk Kerkorian, then a major investor in General Motors. In December, well after the talks broke down, Ghosn said he did not think he needed an American partner per se, but he did admit that Nissan's production capacity was insufficient to meet its sales goals. (See "Ghosn: We Don't Need A Third Wheel")

- The Associated Press contributed to this report.

 

Give us a 7AT TT Sedan in '08 and we'll help improve their balance sheet

 

Release the GT-R now!

 

that sucks

 

I wonder if the upcoming GT-R will hurt or help their cause...?

 

I can't see the GT-R making much difference one way or the other. They won't sell enough of them to matter. For what they spent developing the GT-R they could have shipped the new G's with a 7AT with an optional TT model. Now that would have made a difference and would have given them a serious chance at grabbing some sales from BMW from the masses still disgusted over the new Bangled 3 series.

 

we need more fuel efficient motor options and bed/cab model options on the truck side. On the car side, we just need the new models to drop.....08 maxima, alty coupe, versa sedan, 08 Z

 

That **** pissed me off! The stock dropped over $2 on friday. I lost...well don't worry about how much I lost. It just means I'll have to wait a little longer before I buy my new rims.

 

Honda stock was down last week. 3 weeks ago Ford stock was down. Its the stock market,
How do you think the brokers make money? I would bet most car markers had a tuff 4th quarter last year. Nissan will rise to the top.

 

Bad mistake.

 

Nissan is going to loose their *** in the small car market because the Sentra and Versa line is absolutely hideous and the small car line is where the market is that now. I just don't get why small cars have to be so damn goofy looking with their narrow widths and silly tall canopies. What happened to the days of the sporty styling and low roofs like Honda's 90s line of the CRX anf Civic?

 

I guess they are aiming for "cute" instead of "sporty"? I agree, I used to have a Sentra years ago and I thought it was a pretty good looking car. I don't like the new ones at all. Both the new Sentra and Versa look like something Renault would make.

Honestly, I think last years Altima sedan looked better than this years too.

The Altima Coupe's ok I guess but nothing to get excited over.

A loaded Maxima is around 34K. You get a FWD car with a CVT transmisson and 255hp. Why not just buy a G35 Sedan?

The only Nissan that interests me is the Z but with the top of the line models costing 36K+ I think would wait on the new G35 Coupe.

 

Nissan's done a great job coming back from bankruptcy. With much better designs and pushing the hp/tq envelope when compared to Honda/Toyota, they've really helped to differentiate themselves from Honda/Toyota. Where Nissan needs to improve is in quality.

I agree, the new Sentra is ugly!