After posting its worst loss in two decades, and despite the fact that it expects another deficit for the current fiscal year, Nissan’s embattled CEO was sounding downright upbeat during a presentation at the Beijing Auto Show, forecasting that the company will see a return to profitability.
Nissan is looking to rebuild momentum in a number of key markets, including the United States, where it is launching makeovers of critical products like Sentra and Rogue. But, according to Chief Executive Makoto Uchida, it’s the strong rebound of the Chinese market that could give the necessary lift to Nissan’s sails.
China was the first global market to be hit by the coronavirus pandemic, quickly closing down much of its automotive production while sales nearly came to a halt. But, even as the crisis swept across the rest of the world, Chinese authorities began opening the country back up and, if anything, demand is now running stronger than it did before the pandemic.
It helps that Nissan has gained significant traction in China thanks to its alliance with domestic Chinese automaker Dongfeng Motor Group. That has helped Nissan gain ground even while other Japanese automakers have found themselves caught up in political turmoil between the two countries.
Nissan could use a boost. The company went 671 billion yen, or $6.2 billion, into the red during the fiscal year that ended March 31. It was the automaker’s deepest deficit since it was bailed out by Renault two decades ago. Company officials have said they expect the current fiscal year to bring another loss.
The pandemic had relatively marginal impact on the big loss Nissan announced last year, largely hammering the company in mid to late winter. The situation grew much worse as cases of COVID-19 started showing up outside China going into the spring. Among other things, Nissan had to shut down its huge assembly plant in Smyrna, Tennessee, as well as twin Mexican manufacturing complexes, for two months.
But the pandemic is only one of the challenges Nissan has faced. The company has been in crisis mode since November 2018 when former boss Carlos Ghosn was yanked off his corporate jet after landing at Tokyo’s Haneda Airport and accused of various financial crimes.
Ghosn claimed the move was part of a “coup” intended to drive him from power. Even though he escaped from Japan just before New Year’s, the automaker has continued struggling to move past the debacle which, among other things, has led to a series of shake-ups in upper management.
Further complicating matters, Nissan has been struggling to reverse some of Ghosn’s less successful policies which saw spending mushroom even while delaying or cutting key product programs.
The company is now rushing to update its various vehicle lines, with the Rogue and Sentra two critical moves. It also is launching a much-needed companion to its Leaf battery-electric hatchback, the new Ariya SUV. Separately, Nissan’s high-line Infiniti brand is offering hints of what it has in store, bringing the QX 60 Monograph concept to the Beijing show. A production version will soon go on sale in China, the U.S. and more than 20 other markets. And Infiniti officials said at its debut they will push out even more new products than promised in the coming years.
Ever since it was bailed out by Renault in 1999, Nissan has counted heavily on the U.S. market to prop it up. The States will remain one of its most important markets but it has become clear that China will become the essential foundation of its turnaround now. And things there are clearly moving in the right direction. While demand in the U.S. tumbled 25.1% in July, it rose 11.6% in China compared to pre-COVID numbers a year earlier.