- nissan's global profit sank 73 percent for the first half of its 2019 fiscal year as the company deals with what the automaker calls an "aged product portfolio."
- every infiniti model in the u.s. is facing double-digit sales declines, too, except for two vehicles.
- the company's financial results are in line with a slowing global car market that has negatively affected nearly every major automaker.
despite the imbroglio of ceo carlos ghosn's arrest on charges of fraud, executive scandals aren't the major factor putting nissan into a nosedive. the automaker reported tuesday that its profits for the first half of its fiscal year were down 73 percent from 2018 due to falling sales, a strengthening yen, and higher material costs.
the automaker, which started the fiscal year on april 1, reported net income of $60.5 million through september 30 across all of its global divisions. at a time when most automakers are reporting operating profit margins (before interest and tax) between 5 and 10 percent, nissan's margin was less than 1 percent.
ghosn was arrested on november 19, a significant reason for a 6 percent stock price decline on that one day. while nissan stock then slid further, after christmas it partly recovered until nissan cut its earnings forecasts in april by estimating it would earn less for the year than its partner renault. the stock was already in decline since february 2018. it's now trading at its lowest price since the recession hit during the summer of 2009.
global sales, at 2.5 million vehicles, slid by 7 percent during april through september. the downtown mirrors a slowing auto industry that has plateaued, particularly in the u.s. and china, after record sales and production during the past few years. demand in china is dropping after most automakers enjoyed a full decade of double-digit growth—nissan posted a 13 percent decline in china—and the europe market is still sagging. over the summer, nissan pulled the plug on infiniti's european division after just 11 years and canceled its joint agreement with daimler to develop future luxury cars. in the u.s., nissan admitted to "an aged product portfolio and continuing efforts to normalize sales," which translates to relying on heavy discounts to move older metal.
nissan, fresh off an all-new altima (pictured) and soon to release a new sentra, should see its bottom line improve in the u.s. within the coming quarters. strangely, the ancient frontier pickup and armada suv recorded monthly increases in october of 27 and 31 percent, respectively. but this wasn't enough to offset year-to-date declines across every vehicle except the kicks, which was new last year, and the nv commercial vans. the 370z and gt-r sports cars are more than a decade old, the titan pickup is losing market share, and popular crossovers like the rogue and pathfinder are hanging on but continuing to drop. nissan's u.s. sales through october are down six percent to 1.1 million cars.
challenges at infiniti
it's become especially bad at infiniti—which has nothing new to sell after years of teasing hot concepts with advanced electric powertrains. its vc-turbo engine, a revolutionary and expensive technology no other automaker has tried in production, hasn't delivered the significant fuel savings that company executives had hoped; our long-term infiniti qx50 is averaging a middling 22 mpg overall.
as a whole, infiniti is down 17 percent year over year through october. most models are tanking at u.s. dealers, with the exception of the qx60, which was flat, and the qx80, which posted a 1 percent increase. infiniti is promising five all-new models over the next three years.
automakers everywhere are cutting jobs—nissan is slashing 12,500 worldwide—and reducing budgets to hedge against declining sales and a possible dip in the global economy. the problem isn't nissan's alone. but the automaker needs to deliver newer and improved product that can outperform competitors—or at least get the cars noticed again—and quickly.