The Wall Street Journal-20080202-Nissan Profit Grows 27- on Sales of New Vehicles

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Nissan Profit Grows 27% on Sales of New Vehicles

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TOKYO -- Brisk sales in Europe, China and the Middle East helped lift Nissan Motor Co.'s net profit 27% in the October-December quarter, despite a weaker U.S. auto market and declining sales in Japan.

Nissan benefited from the introduction of several new vehicles, including the Rogue sport-utility vehicle in the U.S. and the popular Qashqai crossover in Europe. Sales of the Qashqai have been so strong that Nissan said Thursday it would add 800 workers at its U.K. plant to boost production to keep up with demand.

Still, the Tokyo car maker reported challenging conditions in the key U.S. market, where higher fuel prices and mounting concerns of a recession have pushed motorists away from Nissan's larger vehicles, like the Pathfinder SUV and Titan pickup truck.

Instead, they are turning to smaller, fuel-efficient cars, which are less profitable.

For the third quarter ended Dec. 31, Nissan said, net profit rose 27% to 132.2 billion yen ($1.24 billion) from 104.4 billion yen a year earlier. Operating profit -- the difference between what its costs Nissan to make a car and what it sells it for -- climbed 16% to 212 billion yen.

Joji Tagawa, head of investor relations, said Japan's No. 3 auto maker by sales would also be challenged by a stronger yen -- which diminishes the value of its overseas sales when converted into yen -- and shrinking demand for new vehicles in the U.S. and Japan.

Mr. Tagawa said the subprime crisis is forcing a "very small" percentage of U.S. consumers to fall behind in their car finance payments. "We foresee a tough situation in 2008," he said.

Despite the cautious words, Nissan kept its forecast of a 2.9% rise in operating profit to 800 billion yen and a 4.2% rise in net profit to 480 billion yen for the fiscal year ending March 31.

Last year, the company, which is 44% owned by France's Renault SA, posted its first drop in annual profit in seven years.

World-wide, Nissan sold 898,000 vehicles during the third quarter, up 13% from the same period the previous year. More than half of all sales during the quarter came from Europe, China, the Middle East, South America and Asia. Nissan sold 111,200 vehicles in China during the quarter, 41% more than a year earlier. Nissan's sales also received a boost in the Middle East, where the car maker sold 57,600 vehicles, a 52% increase. European sales shot up 13% to 148,000, with the biggest gains in Russia.

In the U.S., sales increased 3.7% to 255,000. Nissan's sales in Japan slipped about 1% to 147,000 in the quarter, the latest sign Japan's car market continues to slump because of an ageing population and the country's economic weakness.