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Nissan Profit Declines 16% on Yen, Higher Incentives

Nov. 7, 2016
A stronger yen eroded overseas earnings and U.S. discounts increased.

Nissan Motor Co. reported a 16% drop in second-quarter profit and predicted that industry demand in the U.S. and China, its two largest markets, will slow.

Net income declined to 146.1 billion yen (US$1.4 billion) in the three months through September, as a stronger yen eroded overseas earnings and U.S. discounts increased, the automaker said on Nov. 7.

CEO Carlos Ghosn has adopted an aggressive dealer-incentive program in the U.S. that has helped Nissan’s deliveries climb, and weighed on its profit, even as industrywide sales in the world’s second-largest market shrank.

The automaker boosted discounts to about $4,000 per car, much higher than Japanese rivals and almost in the same range offered by the U.S. automakers, according to Tokai Tokyo Research Center.

“It’s a peak and we don’t see a potential for further growth” in the U.S. industry, Hiroto Saikawa, co-chief executive officer, said at a press conference on Nov. 7 in Yokohama, Japan. “Incentives are rapidly growing in the industry, and we are paying close attention to it.”

In China, Nissan’s second-biggest market, Saikawa said the automaker plans to keep pace with industrywide growth.

Still, it sees demand waning in the world’s biggest auto market with sales slowing in the first quarter if a sales tax cut on small-engine vehicles isn’t extended beyond its scheduled expiry at the end of this year, according to Jun Seki, the company’s China chief.

By Ma Jie and Masatsugu Horie

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