Nissan's Ghosn Says Asia to Lead Growth as U.S. Cools

April 12, 2005; Alan Ohnsman writing for Bloomberg reported that Nissan Motor Co., Japan's No. 2 carmaker, expects sales gains in Asia and Russia in the next three years to make the company less dependent on the U.S. for growth, Chief Executive Officer Carlos Ghosn said.

Ghosn said in an interview today he expects to raise the company's global sales to 4.2 million vehicles by March 2008 from more than 3.38 million in the year that ended March 31. He will detail a new business plan for Tokyo-based Nissan later this month that includes 28 new and redesigned vehicles.

``This is an additional 820,000 for the next three years,'' said Ghosn, 51. ``The biggest contributor is going to be the general overseas markets, mainly Asia, China, Southeast Asia, Russia.''

Nissan, after seven years of losses in the 1990s, has earned record profits under Ghosn. The company is searching for places to grow after increasing annual sales in the U.S., its biggest market outside Japan, by 300,000 units in the past three years. The U.S. has been the largest contributor to Nissan's expansion, and North America accounts for almost 40 percent of the company's global sales.

Expanding Nissan's focus beyond the U.S. ``is a smart strategy,'' said Rebecca Lindland, a forecaster at Lexington, Massachusetts-based Global Insight Inc. ``You don't want to depend too much on one country when you've got an opportunity in a place like China.''

Nissan has met the sales and profit targets set by Ghosn since he joined in 1999. The company has the highest profit margin among the world's largest carmakers. Its shares, which tripled in value in the past four years, have been flat so far in 2005, even as U.S. sales increased 12 percent through March.

Ghosn next month is to become chief executive of France's Renault SA, which owns 44 percent of Nissan. He will remain Nissan's chairman and CEO.

U.S. Growth

U.S. sales will expand at a more ``moderate'' pace of 5 percent to 6 percent a year, Ghosn said. Nissan's sales in the U.S. grew 24 percent last year as the company added new sport- utility vehicles and pickup trucks. The company for the first time sold 1 million vehicles annually in the U.S., in the business year that ended March 31. Sales rose 7.4 percent in 2003 and 5.1 percent in 2002.

``The U.S. is going to continue to grow, and our next offensive it going to come from smaller cars,'' Ghosn said.

Global Insight estimates Nissan's U.S. sales will increase about 3 percent annually through 2009, Lindland said.

The growth in Nissan's share price, which stalled in 2004 and so far in 2005, should resume this year, Ghosn said.

``Over the next six months, people are going to see Nissan continuing to perform at a high level,'' Ghosn said. ``I have no doubt of the fact that you're going to see very soon the stock moving up again because the fundamentals are very healthy.''

Profitability, China

Nissan's pursuit of large sales gains in developing markets could harm profitability if Nissan is forced to lower prices of its vehicles, said Peter Boardman, vice president for international equities at Los Angeles-based NWQ Investment, which has $33 billion under management.

``Nissan's prices are still relatively high'' for the Chinese, Southeast Asian and Russian markets, Boardman said, whose fund doesn't currently own Nissan or Renault shares. ``If they're really going to grow there, they're going to have to do it at a much lower cost structure.''

The company is projected to have sales of about 200,000 annually in China by 2008, up from about 107,000 in 2004, Global Insight said. Nissan sales in Russia, which were below 10,000 units last year, should rise to about 27,000 by 2008.

Anti-Japanese protests in China that have sparked attacks on retailers, restaurants and other businesses, will probably subside and should be viewed with ``serenity,'' Ghosn said.

``You can see these bursts of nationalism in any country. It gets very emotional,'' Ghosn said. ``It's not good for business, but personally I don't think it's going to last.''

Fuel-Saving Vehicles

Nissan hasn't yet sold gasoline-electric hybrid vehicles to U.S. consumers. The company plans to be ``aggressive'' in developing fuel-saving technology, Ghosn said.

Nissan will ``diversify'' its offering of ``fuel-efficient cars particularly in the small car in the U.S.,'' Ghosn said. He said sales of large trucks are slowing because ``there's more concern about the high price of gasoline.''

The company has said it will begin selling U.S. hybrid versions of its Altima sedan next year, using some gas-electric technology licensed from Toyota Motor Corp., Japan's largest automaker.

Nissan's U.S. operations are based in Gardena, California. The company's American depositary receipts fell 18 cents to $20.73 at 4 p.m. in Nasdaq Stock Market composite trading. They have declined 9.7 percent in the past year.