Ghosn: Optimistic About Nissan Profit Targets
By Michelle Krebs May 25, 2007
Nissan-Renault chief Carlos Ghosn said this week Nissan should achieve its 2007-2008 fiscal year profit targets after missing them by more than 10 percent in the 2006-2007 fiscal year that ended March 31.
"We are pretty confident, but it's only two months into the fiscal year so we'll have to see," Ghosn told reporters after delivering a speech in Detroit to the Society of Automotive Engineers Foundation.
Ghosn apparently is looking for Nissan’s cost-cutting –- not sales growth -– to help it meet its targets. Despite launching new models this year after several months without anything new, Nissan sales are not stellar. Edmunds.com predicts Nissan sales will be down for May, when they are reported next Friday, though market share will hold steady. Nissan also is looking to Europe and emerging markets for higher sales to offset the depressed sales in the U.S. and Japan.
Nissan had targeted profit of $4.4 billion in the last fiscal year, but missed it by 11.1 percent. Its fourth-quarter profit fell by nearly half as the company announced an employee buyout program in Japan and its U.S. manufacturing operations. The operating margin for the year was cut to 7.6 percent, down from 9.2 percent in the previous year.
Ghosn announced Nissan will donate $1.5 million to an SAE Foundation campaign to encourage children to study math and science, particularly in kindergarten through third grade.
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I think for Nissan to keep driving sales growth they need to get into the game of competitive pricing. For example, I am really into the new Altima. But configured the way I want it, which is with leather & the v6, it costs more than $29k. That's the price of a similarly equipped Camry, and more than an Accord. Nissan is on the way up, but it is still not Toyota and Honda, and it needs to reflect that in its pricing. They ought to be aiming for lower prices than Toyota and Honda, maybe around Hyundai territory. Nissan has already shown that they can make compelling vehicles, but they need to keep the pricing pressure on, otherwise, it's just too easy to be safe and choose the Camry (or Avalon, or Tundra, etc...)
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