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Last Updated: Friday, 28 October 2005, 10:19 GMT 11:19 UK
Nissan warns of tough times ahead
Nissan president Carlos Ghosn
Nissan's chief says bankruptcies in the motor industry are on the way
Japanese carmaker Nissan has warned that sales are set to slow, as it reported an 8% rise in net profits.

Nissan, 44% owned by France's Renault, said intense competition in the US and rising fuel and material costs were the main challenge to its performance.

Car sales in the US, the biggest world market, have been supported by deep discounts.

Carlos Ghosn, who is chief executive of both Nissan and Renault, said these were unsustainable.

Nissan is part of the increasingly powerful Renault-Nissan Alliance, which sold almost six million cars in 2004, and which aims to sell closer to eight million by 2010

US problems

The rise in Nissan's net profits to 125bn yen ($1.1bn; 609m) during the three months to September was largely the result of a recovery from a one-off loss in same period the previous year.

Ghosn's giant
Nissan Zaroot
Nissan is the world's ninth largest car maker, Renault the tenth, in terms of unit sales
Carlos Ghosn is to become chief executive of both
The alliance commands a 9.6% global market share
Renault holds a 44.4% stake in Nissan
Nissan holds a 15% stake in Renault
Operating profits - a measure of the return on the company's core performance - were down 5.5% in the quarter, despite sales rising 11.5% to 2.35 trillion yen.

The caution inherent in Nissan's numbers follows several years of stellar performances - themselves a turnaround for a company which until Renault's investment and Mr Ghosn's arrival in 1999 was losing 600bn yen a year.

The US is the key problem, according to Mr Ghosn, although he also warned about the business environment in general, which he described as "severe" amid rising fuel prices and widespread consumer gloom.

Mr Ghosn said he was pessimistic about the market conditions in Japan, Western Europe and North America.

The price war in North America was hurting all carmakers and was unsustainable, he said.

Even so, the incentives and discounts would probably continue for another couple of years, he said.

But even if Nissan is finding times getting tougher, it - and its fellow Japanese carmakers Toyota and Honda - are still in much better shape than their US rivals GM and Ford, both of whom are deep in the red in their domestic markets.

When asked by Reuters whether this could mean some car makers would go under, Mr Ghosn responded: "It's starting to happen already."


SEE ALSO:
Europe denting Nissan and Peugeot
26 Jul 05 |  Business
US car firms lose out to rivals
03 May 05 |  Business
Nissan names successor to Ghosn
21 Feb 05 |  Business


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