HMC Honda Motor Co Ltd

By Sean McLain 

TOKYO -- Nissan Motor Co. maintained its full year sales guidance for the year on Monday despite the corrosive effect of a stronger yen on earnings, betting that a stable of new models would help it outrun a broader decline among Japanese car makers in the U.S.

Japanese car makers, such as Honda Motor Co. and Mitsubishi Motor Corp., have reduced sales projections for the year on the back of a strong yen. But Nissan expects sales in the second half to be strong enough to overcome the adverse exchange rate.

"We have a strong product lineup in the second half to help us reach this target, said Hiroto Saikawa, Nissan's co-chief executive. The company maintained its guidance for the full year ending March of Yen11.8 trillion ($113 billion) in revenue and Yen525 billion in net profit, despite currency headwinds.

Nissan has already missed the goal set by Chief Executive Carlos Ghosn in 2011 to have 8% of the global automotive market and an 8% profit margin by the end of this financial year. The company now projects a 6% operating profit margin for the year, and global market share is currently 5.8%, down from 6.1% a year ago.

Blame it on the yen, said Mr. Saikawa. A stronger yen ate away 179.9 billion yen in the company's profit for the fiscal first half.

Nissan said it earned 154.7 billion yen for the July-September quarter, down 13% from a year prior.

In Japan, the company's business was hammered by halted sales of popular car models manufactured by Mitsubishi Motors, which admitted in April to tampering with fuel economy data on the vehicles. Nissan's Japan sales volume fell 20% in the first half of the year, in part because of the halted sales.

Nissan is betting that the resumption of those car models and the popularity of a minivan with self-driving features will help stem the bleeding in its home market.

Nissan bought a controlling stake in Mitsubishi Motors, incorporating it into the broader alliance with Renault SA. Mr. Ghosn will head Mitsubishi's board, a role he said is to help accelerate a turnaround at the company.

But much depends on Nissan's ability to keep up the pace in the U.S.

Nissan has been better than its peers at reading market demand outside of Japan, particularly in the U.S.

The company's U.S. sales rose 4.7% in the first 10 months of the year, while Toyota Motor Corp.'s declined and Honda Motor Co. grew a more tepid 2.6%.

Some of that growth has been due to Nissan offering more cash incentives on its vehicles compared with rivals, something that gets customers in the door, but isn't great for the bottom line.

Nissan says it has to cut back on those enticements as U.S. consumers take advantage of low gas prices by flocking to trucks and SUVs, at the expense of sedans. It said it hopes updated pickup truck and SUV models will help wean the company off sedan sales, which represent more than half of its total U.S. sales.

Nissan last month said it would press ahead with the manufacture of its Qashqai sport-utility vehicle and a second model in Sunderland, England, a move widely seen as a vote of confidence in the U.K. amid uncertainty following the Brexit vote.

Write to Sean McLain at sean.mclain@wsj.com

(END) Dow Jones Newswires

November 08, 2016 02:50 ET (07:50 GMT)

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