Nissan Sees Mediocre Years in Europe, Rules Out ‘Armageddon’

Nissan Motor Co. CEO Carlos Ghosn
Carlos Ghosn, chairman and chief executive officer of Nissan Motor Co. Photographer: Jerome Favre/Bloomberg

Nissan Motor Co. Chief Executive Officer Carlos Ghosn said he expects Europe’s automobile industry to take many years to recover from shrinking demand and excess capacity.

Nissan is “preparing for many mediocre years” in Europe, Ghosn said today in a Bloomberg Television interview in Hong Kong. While it faces overcapacity, the region “will not see any kind of Armageddon,” he said.

Auto sales in Europe have collapsed to their lowest level in 17 years, as the sovereign debt crisis saps demand amid rising unemployment and slowing economic growth. Nissan will manage its capacity in the region to match demand, Ghosn said.

“The overall market is shrinking, so I would expect Nissan to cut back on production,” said Mitsushige Akino, executive director at Tokyo-based Ichiyoshi Asset Management Co. “It’s very likely for the current situation in Europe to continue for several years, and Nissan’s sales growth will probably be in line with the market.”

Nissan fell 0.5 percent to 736 yen as of 12:53 p.m. in Tokyo trading, while the benchmark Nikkei 225 Stock Average gained 0.5 percent.

The Yokohama City, Japan-based carmaker sold 41,832 units in Europe last month, a 3.1 percent increase from a year earlier, according to the company.

Future Star

Nissan plans to build more than 5 million cars this year, Ghosn said, with growth coming from Southeast Asia and the U.S.

“Myanmar may be the star of future” along with Indonesia and Vietnam, Ghosn said. He said he hopes the new Altima midsize sedan will take “top position” in the U.S., where the industry continues to recover.

Japan’s second-largest automaker in July reported a 15 percent drop in first-quarter profit, falling short of analysts’ estimates, as it increased incentives and marketing spending in the U.S. on models including the Altima.

While Nissan is expanding output capacity in Southeast Asia, the strong yen is deterring the carmaker from expanding production at home, Ghosn said.

The Nissan executive, who’s also CEO of Renault SA, said yesterday that market growth in China has failed to live up to previous expectations, though the company is sticking to its delivery projections.

Ghosn said today he hasn’t seen a significant impact on China sales from political tensions over a island dispute between Asia’s largest economy and Japan.

“We’re not worried about the Chinese economy,” Ghosn said. “We are being prudent and we need to be careful.”

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