Nissan’s core business remains weak but is showing some initial green shoots of improvement. While automotive profitability is expected to remain negative through the end of FY24 in March 2025, it posted 10% retail sales growth in the US in F3Q24 and targets further 16% YoY growth in F4Q24. Management expects the improved sales velocity, driven by the launch of refreshed 2025 model year vehicles, to help reduce dealer inventories by 20% in the current quarter and set the stage for lower incentive spending and improved profitability in FY25. While profit improvement in the US would be a positive development in FY25, the turnaround in its second-largest market, China, will likely take longer as it strives to develop and launch new energy vehicles for that market.

Management reiterated its FY24 targets for production volumes and retail sales, both of which it lowered with the release of last quarter results. It targets 3.2 mn units of production and 3.4 mn units of retail sales, down 7% and 2%, respectively, as it strives to reduce dealer inventories of old model year vehicles to make way for new model year vehicle launches. The retail sales decline is broad-based across most regions, with the steepest decline of 12% in China. However, management targets a 6% retail sales increase in North America, its largest region by volume that is projected to account for 39% of the company’s unit volume in FY24.

Despite the unchanged production and retail sales volume expectations, management lowered its revenue by 2% based on slightly lower wholesale volumes and higher variable marketing expenses. It also lowered its consolidated operating profit outlook by 20% as the benefits of currency and lower raw materials is expected to be offset by high sales incentives, lower volume/mix, and higher manufacturing and other costs. The revised FY24 guidance implies a consolidated operating margin of 1.0%.