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Nissan’s Ghosn no relief in US in 2008

‘I see a tough market in the United States—a shrinking market, higher prices of raw materials, and no pricing power,’ said Ghosn, who also heads French partner Renault SA

‘I would love to be wrong,’ he added.

Ghosn’s outlook contrasts with an upbeat view of the US car market by his counterpart at Toyota Motor Corp, who said at the same conference that he expects a robust US market—though not necessarily in 2008 -- backed by strong economic fundamentals and a growing population.

A healthy US market is crucial for Japan’s top automakers as they make more than half their profits there. In addition to a slowdown in sales volumes, downward profit pressures have come from a shift in consumer preference to smaller, more fuel-efficient cars.

That and a rise in commodity costs and falling volumes in Japan and some other markets pushed the operating profit margin at Nissan, Japan’s third-biggest automaker, to 7.4 percent in the year ended March 31, from 9.0 percent in 2005/06.

Asked to rate Nissan’s current performance, Ghosn repeated his characterisation of an operating margin below 8 percent as a ‘crisis situation’ that needed to be reversed.

‘Something must be done to bring it to 8 percent,’ he said, grading management’s score a ‘B’.

Nissan’s monthly sales in the United States have been rising from particularly low volumes a year ago, and Ghosn has flagged a further recovery in the second half of this business year with new models such as the Rogue crossover.

Nissan is scheduled to announce its results for the half-year that ended on Sept. 30 on Friday. Consensus estimates have its second-quarter operating profit falling 6 percent due to a decline in US sales of its higher-profit light trucks.