Credit China. That’s the message from two major automakers as they report earnings from opposite ends of the globe. For Daimler AG, a worldwide resurgence in luxury car demand – especially in the fast-growing Chinese market helped it come in with an all-time quarterly record that was up 30% year-over-year.
The numbers weren’t nearly as good for Nissan, but that was no surprise considering the devastating hit the Japanese industry, overall, has taken since the devastating earthquake and tsunami that killed more than 20,000 on March 11 and left the industry in a shambles. If anything, the 10% decline in net income was less than many had anticipated, while revenues – also driven by China – were up markedly.
“Our rapid recovery from the natural disasters in March once again shows the power of Nissan in responding effectively and decisively to crisis,” said Nissan President and CEO, Carlos Ghosn. “Nissan’s performance in the first quarter, despite strong headwinds such as foreign exchange and rising raw material costs, demonstrates our potential to deliver the goals of our recently announced Nissan Power 88 mid-term plan.”
Daimler’s second-quarter profits rose by nearly a third during the April – June quarter, to $2.5 billion, with the flagship Mercedes-Benz brand up 14%.
The maker’s sales in China totaled a solid 52,498 for the quarter, less than 2,000 behind what the maker sold in its lead market, the U.S. But in a conference call, Dieter Zetsche, the CEO of Daimler and brand boss of Mercedes, cautioned that while sales in the Asian nation were up 8% for the quarter that was a sharp drop from the 82% increase seen during the first quarter of this year.
That reflects mounting concerns, industry-wide, that the Chinese market may be slowing down even as manufacturers are getting ready to invest billions to expand production capacity, introduce new brands and boost their line-ups. Indeed, Nissan earlier this week revealed plans to invest $8 billion in China in a goal of boosting sales by 50% or more. (For more, Click Here.)
The slowdown in China was apparently responsible for the fact that Daimler’s quarterly revenues rose only 5%, falling short of expectations and triggering a modest drop in trading on the Frankfurt exchange.
But Zetsche remained unperturbed, promising that, “With our excellent first half of the year, we are fully on schedule to turn 2011 into one of the most successful years in our long corporate history.”
The equally unflappable Nissan CEO Ghosn has been confidently predicting his company would ride out the March disaster, and analysts suggest the latest numbers – covering the first quarter of the Japanese fiscal year – are signs that Ghosn is on target.
Nissan has arguably been least impacted among major Japanese makers by the March quake, in large part because it has moved the lion’s share of its vehicle production off the home island and expanded its base of non-Japanese suppliers.
While, in yen, net income dropped to 85.02 billion for the quarter compared to 106.65 billion a year earlier, Nissan saw sales climb 1.6%, to 2.08 trillion yen.
Nissan has forecast that it will feel a relatively modest impact for the year overall due to the March disaster. But it is targeting significant longer-term growth under the Power 88 plan, predicting a jump from 4.6 million sales annually to 7 million, while profit margins would climb to 8%.
(Click Here for more on the Power 88 plan.)
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