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Fundamental View
AS OF 20 Aug 2025While management has not yet provided consolidated operating profit guidance for FY25, it lowered its FY25 tariff impact estimate by one-third and pointed to “green shoots” in retail vehicle sales trends in North America and China. At the same time, management’s formal retail vehicle sales guidance implies a 1% YoY decline for the balance of the year – not what we would call a bullish outlook. Management is making progress on its manufacturing plant reduction, having announced five of the seven planned plant closures, although it will take time to wind down production and relocate it to other plants. Overall, we remain hopeful but not optimistic regarding management’s Re: Nissan turnaround plan and view the cadence of its monthly retail sales as the best indicator of the plan’s progress.
Business Description
AS OF 20 Aug 2025- Nissan, with headquarters in Yokohama, Japan, is a leading global automotive manufacturer with a market presence in many countries around the globe. The company’s growth investments are focused primarily on Japan, North America, and China, core markets with large profit pools in which Nissan has a meaningful market share. The company’s business in China is conducted through a joint venture with Dongfeng Motor Corporation.
- Nissan’s Sales Financing segment supports the sale of its vehicles by providing financing solutions to its customers and dealers. To enhance their creditworthiness, Nissan maintains keepwell (support) agreements with its wholly owned financial subsidiaries including Nissan Motor Acceptance Corporation (NMAC) in the United States and Nissan Financial Services (NFS) in Japan.
- The Renault-Nissan-Mitsubishi Alliance was established in 1999 to enhance member company scale in product development and raw material purchasing. The alliance includes equity participation, which led to Nissan holding ownership stakes in Renault (15% non-voting) and Mitsubishi (34%) and Renault holding an ownership stake in Nissan (43%). The Alliance’s automobile production volume is the third largest globally behind Toyota and Volkswagen.
Risk & Catalysts
AS OF 20 Aug 2025Management reaffirmed its FY25 guidance for global automotive production, global automotive retail sales, and revenue. However, full-year guidance for operating profit, net income, and automotive free cash flow is still “to be determined” owing to uncertainty related to the potential impact of tariffs and additional restructuring costs that are currently being assessed.
Management expects automotive free cash flow to improve from ¥(390) bn in F1Q25 to ¥(350) bn in F2Q25, including the estimated tariff impact, before turning positive in 2H25. The combined automotive free cash flow of ¥(740) bn in 1H25 – roughly US$4.9 bn – currently represents our worst-case scenario for FY25 automotive free cash flow, assuming the company is automotive free cash flow breakeven in the back half of the year. FY25 automotive free cash flow upside can be achieved if the company generates positive free cash flow in 2H25 as management expects based on its seasonal patterns of working capital usage and cash generation.
Key Metric
AS OF 20 Aug 2025| JPY bn | FY21 | FY22 | FY23 | FY24 | LTM F1Q25 |
|---|---|---|---|---|---|
| Revenue | 7,393 | 9,573 | 11,524 | 11,371 | 11,083 |
| EBIT | (78) | 218 | 394 | (78) | (256) |
| EBIT Margin | (1%) | 2% | 3% | (1%) | (8%) |
| EBITDA | 211 | 535 | 745 | 286 | 77 |
| EBITDA Margin | 2.9% | 5.6% | 6.5% | 2.5% | (5.2%) |
| Total Liquidity | 3,601 | 3,658 | 4,196 | 4,272 | 2,670 |
| Net Debt | (728) | (1,213) | (1,546) | (1,498) | (1,134) |
| Total Debt | 973 | 687 | 468 | 661 | 936 |
| Gross Leverage | n/m | 1.3x | 0.6x | 2.3x | 12.1x |
| Net Leverage | -3.4x | -2.3x | -2.1x | -5.2x | -14.7x |
CreditSight View Comment
AS OF 24 Sep 2025We maintain a Market perform recommendation on Nissan Motor and Nissan Motor Acceptance Co. (NMAC) notes based on the company’s weak near-term outlook for automotive profit and free cash flow that is made harder by tariffs, its turnaround initiatives that target positive profit and free cash flow by FY26, new vehicle launches that target improving retail sales momentum, recent refinancing activity of FY25 debt maturities that also bolstered its liquidity, and relative value.
Recommendation Reviewed: September 24, 2025
Recommendation Changed: July 16, 2025
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