Business / Corporate

Nissan shakes off virus woes with April rebound in China, sources say

by Norihiko Shirouzu

Reuters

Vehicle sales by Nissan Motor Co. in China this month had almost recovered to the prior year’s level, after logging a coronavirus-related 44.9 percent plunge in March, two sources with knowledge of the automaker’s preliminary data have said.

The data reinforces growing optimism that the world’s biggest car market is stabilizing fast as businesses return to normal in China, making it a rare bright spot as most dealerships in Europe and the United States remain shut.

Nissan’s vehicle sales in China, which include Nissan, Infiniti and China-only brands, as well as light commercial vehicles, contracted just “a few percent” in April from a year earlier when it sold roughly 121,000 vehicles, said the people who had seen the data.

Sales of the Nissan brand alone showed a “small growth,” one of the people said.

Nissan declined to comment on the April sales numbers but said the data would be made public on May 11. The people declined to be named as the data was preliminary and not yet public.

The estimated results mark a sharp improvement from the 44.9 percent drop in March and 80.3 percent fall in February previously reported by Japan second biggest automaker.

“We’re putting all efforts on China and the U.S. market to regain momentum,” said the other source, adding that Nissan was ramping up marketing and offering incentives to dealers.

He also pointed to what he described as nascent signs of “changing views” on public transit and ride-hailing services resulting from the coronavirus outbreak, which might have encouraged some consumers to shun such services and opt to buy cars instead.

In China, Nissan makes cars with state-owned Dongfeng Motor Group. The Japanese automaker said in January it aimed to sell 1.6 million vehicles in China this year.

Nissan’s improving sales also follow upbeat data released by an auto industry group in China, cementing optimism that momentum building since the start of this month has gained a solid foothold.

The China Passenger Car Association said this week that sales of passenger cars jumped 12.3 percent between April 20 and April 25, helping to limit the drop in sales in the first 25 days of the month to 1.6 percent compared to the same period a year earlier.

China’s auto sales tumbled 43.3 percent in March in their 21st consecutive month of decline, but improved from a 79 percent plunge in February.

A solid business recovery in China would offer much needed relief for Nissan, which had been reeling from falling global sales even before the pandemic due to an aggressive expansion plan pursued by ousted leader Carlos Ghosn.

A third company insider said market share was a more critical focus for Nissan than volume as it deals with the effects from the COVID-19 pandemic.

He said Nissan’s chief operating officer, Ashwani Gupta, who chairs the company’s internal China management committee, had already shifted Nissan’s strategy.

“He wants Nissan’s China team to focus on market share without jeopardizing profitability, so when the market starts growing again, you get the volume, too,” the source said.

The source added that such a strategy was critical as Nissan waited for new and redesigned products for the China market.

The pandemic has piled on pressure to renew downsizing efforts, and Nissan’s management has become convinced that the company needs to be much smaller, arguing for a recovery plan that will likely cut 1 million cars from its annual sales target, Reuters reported this month.

Nissan expected on Tuesday an annual operating loss of as much as ¥45 billion ($420 million) for the year ended March 31, which would be its first such loss since the 2008 global financial crisis.

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