Japan's troubled Nissan Motor Company tumbled into the red as a result of poor car sales at home according to latest results.

Nissan, reported a 14bn yen net loss (£60m - $100m) last year, in contrast to a 77.7bn yen profit the year before.

Motoring industry expert Prof Garel Rhys of Cardiff Business School: "Nissan have lost the spark."

Pre-tax profits crashed 96.7% to just 4.7bn yen, with sales slipping 1.4% to 6,564.6bn yen.

The poor results were in sharp contrast to record profits unveiled by rivals Toyota and Honda last week.

Only a year ago, Nissan thought it had seen a turnaround in its fortunes with the falling yen and stronger sales.

The strong pound is hitting Nissan

But Japan's second largest car maker after Toyota continued to lose market share. Facing a huge burden of debt, the company last week issued its second profit warning in only six weeks and promised it would freeze new overseas projects.

Despite rumours of possible links with several other car makers, including the sale of Nissan Diesel to Daimler Benz, the outlook is gloomy.

Ian Robertson of the Economic Intelligence Unit said: "I think the company is suffering a lot from the fall back in demand in Japan. The market there is down 20% this year. It has also been hit by the crisis in Asia-Pacific where demand has just collapsed.

"The only two markets which are working for it are in the US and Europe. However in the US, Nissan's margins are wafer thin. It is selling comparable vehicles at a $1,000 less than Toyota.

"And in Europe, the company has just lost its market leadership to Toyota. It is having to spend a lot of its earnings on market incentives."

Slump in sales

Falling sales in Japan mean all the main manufacturers have cut back their production in the last year.

Toyota has seen vehicle production fall by 14.4%, Nissan has slashed production by 21.1%, Honda by 10.7% and Mitsubishi has cut back by 19.3%.

To fight the weak sales in the Asia Pacific region the car makers have placed greater emphasis on exports to the USA and Europe.

Japanese car production has been slashed following a slump in demand

But in Britain, which is Nissan's biggest European market, the strength of the pound has driven up costs to an unacceptable level.

Mr Robertson added: "Nissan has recently said that unless sterling drops by up to 20% in value, the company could not consider further investment in the UK.

"I think that is confirmation of the financial straits that Nissan is finding itself in."

However Nissan's factory in Sunderland is the most productive plant in Europe and for the foreseeable future Britain remains its primary base.

But with much of Nissan's UK output intended for export, sterling's strength makes Britain's position in the company particularly vulnerable.

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