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Nissan's new business strategy unlikely to boost laggard growth
Hard as management may try, Nissan Motor's shares are unlikely to get a lift from a new business plan to be unveiled next week, as Japan's No 3 automaker struggles to narrow the gap on its bigger rivals.
- Reuters
- Published: 23:56 May 9, 2008
Tokyo: Hard as management may try, Nissan Motor's shares are unlikely to get a lift from a new business plan to be unveiled next week, as Japan's No 3 automaker struggles to narrow the gap on its bigger rivals.
Top ranked Toyota Motor and No 2 Honda Motor have already warned they see tough times ahead from a sluggish US auto market, soaring commodity prices and a stronger yen.
Analysts say things look no brighter at Nissan, which has been slower to succeed in China and other fast-growing markets as the US, Europe and Japan suffer. "I think the market's reaction towards the business plan will be cool," said Goldman Sachs analyst Kota Yuzawa.
Many analysts expect the plan, due with Nissan's annual results on Tuesday, to recap the myriad projects announced over the past year for ramping up expansion in emerging markets.
While few absolute numerical targets are expected, besides the per-share dividend that Chief Executive Carlos Ghosn has promised, Nissan is likely to talk up the prospects for its Infiniti luxury brand and electric car production.
Even so, growth is still likely to lag that at Toyota and Honda, which, unlike Nissan, did not stall to restructure and slim down to escape bankruptcy in the 1990s.
"For the auto industry, annual growth is typically limited to 5-10 percent, assuming forex is constant," UBS analyst Tatsuo Yoshida said.
"At the top of that range you'll have companies like Honda, Suzuki Motor and Toyota. Nissan will also grow, but compared with Toyota and Honda the road is going to be bumpier. There's also no guarantee all the projects will succeed."
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