Nissan: “Worse Than a Year Ago”
June 20, 2007
Nissan-Renault CEO Carlos Ghosn made a number of announcements to shareholders, a record 2,100 who packed the auditorium, today:
· the company’s first quarter earnings would be “worse than a year ago";
· the Nissan board will forgo its bonus for failing to meet set targets last year;
· the automaker will announce a new mid-term business plan before April of next year;
· and Nissan and Renault, as reported, are study the feasibility of a vehicle to sell for around $3,000 (U.S.) in India.
Ghosn said told shareholders Nissan’s decline was down due to higher costs, including more expensive raw materials and incentives to lure buyers to the brands, and taxes.
Ghosn said the lower results for the quarter are “totally in line with forecasts,” Nissan's problems are temporary and he is confident better times are ahead. In April, Nissan reported net profits had declined 11.1 percent from the previous year even though Nissan’s revenues rose 11 percent.
One media outlet reported that a shareholder stood up and demanded Ghosn resign and take responsibility for failing to meet his own "commitments." Other shareholders noted that Nissan had fallen behind in quality surveys.
Ghosn was grilled not only about whether Nissan was falling behind in product quality and "green" technology. He did admit Nissan's finances were so bad in the 1990s that it didn't invest in technology and now is playing catch-up. It is investing aggressively in new plants in emerging markets, new models, green technologies and image building.
Ghosn said a couple months ago when fiscal year earnings were announced that the company would extend its Nissan Value-Up plan by a year to March 2010. He said the new mid-term business plan would include an “attractive” dividend policy for shareholders. He did not detail whether new mid-term targets would replace the current goals or whether they would be in addition to them. He did say the mid-term plan would include a favorable shareholder dividend policy.
Beyond confirming reports in the French media last week about the small car, Ghosn provided few details. According to those reports, Nissan-Renault would offer a car cheaper than Renault’s Dacia Logan in India to compete with a similar car project by India’s Tata. An alliance partner in India, possibly Mahindra & Mahindra, likely would build the Nissan-Renault model.
Posted by Michelle Krebs at 7:33 AM under Business , Companies , News | Comments (4) | digg this | Seed Newsvine
Remember how some pundits thought that GM should team up with Nissan/Renault a few months ago?
Yeah. Neither do I.
Posted by: ThriftyTechie | June 20, 2007 at 1:59 PM
Oh I remember. Now it is even more obvious that GM made the right decision.
Posted by: Michelle Krebs | June 20, 2007 at 2:04 PM
Which company do you think has more potential a year from now? I think that GM has come out with some good products with the Aura and the Outlook/Acadia/Enclave. I like the products coming out for Cadillac and GM as a whole. I like the new Altima and Versa, but the revised Infiniti G and Sentra don't look that exciting. It seems that Nissan sometimes hits but a lot of time misses in terms of product.
Posted by: Jerry | June 21, 2007 at 2:18 PM
Maybe Nissan should "Value-Up" their cars and customers might see them as worth the amount their asking for. You get less for your money with Nissan products; I've done my comparison shopping recently and, like 3 years when I shopped for new car, Nissan still offers less bang-for-the-buck.
Posted by: Frank908 | July 19, 2007 at 8:34 AM