Nissan Cuts Operating Profit Forecast After Japan Recall

Japan’s Nissan has reduced its full-year profit forecast as a safety inspection scandal hit earnings.

The carmaker expects operating profit of 645bn yen ($5.7bn; £4.3bn) for the year to March 2018, down from previous guidance of 685bn yen.

Nissan boss Hiroto Saikawa bows at a press conference in October

It also saw a sharp drop in operating profit for the three months to September owing to weakness in the US.

It recalled 1.2 million cars in the domestic market last month after flaws in safety checks were discovered.

At a media briefing in Yokohama on Wednesday, Nissan chief executive Hiroto Saikawa gave a long bow of apology and vowed to “regain the trust” in the wake of the scandal.

“I would like to express my apologies to customers, business partners, dealers and all the people who have been supporting Nissan,” he said.

Japan’s second-largest carmaker suspended local production for about three weeks after it revealed uncertified workers carried out final vehicle inspection checks for decades. On Wednesday, it resumed production at all six of its domestic assembly plants.

The saga is the latest in a string of misconduct cases involving Japanese manufacturers, including a data falsification scandal at Kobe Steel. Last year, Mitsubishi Motors admitted that it had falsified fuel efficiency tests on some models.

Earnings update

While costs related to safety scandal are expected to hit Nissan’s annual profit, other headwinds weighed on its quarterly earnings.

Operating profit fell to 128.5bn yen for the three months to September, down from 163.9bn a year earlier.

The result, which missed market expectations, came as sales fell 2.2% in the increasingly competitive US market. On Tuesday, Toyota, Japan’s largest carmaker, said its sales in North America hit their lowest level in nearly three years.

But Nissan fared better closer to home. Sales rose 8% in China, the world’s biggest car market, and jumped 25.6% in Japan over the quarter.