TOKYO -- Hefty incentives and plunging profits in North America offset foreign exchange gains at Nissan Motor Corp. to temper net income growth in the October-December quarter.
As Japan's other carmakers rode the weak yen to bumper profits, overall net income at Nissan rose a comparatively meager 57 percent to ¥84.30 billion, or about $801.2 million, in the company's fiscal third quarter, the country's No. 2 automaker said while giving financial results Feb. 10. That was up from $511.3 million a year earlier.
Nissan's global revenue climbed 25 percent to $23.97 billion in the three-month period, while global unit sales rose 6 percent to 1.2 million vehicles.
The weakening Japanese yen chipped in a windfall gain of $746.1 million in the quarter. The yen has dropped about 23 percent against the dollar over the past year, increasing the value of overseas earnings when they are repatriated to Japan and making Japan-made vehicles more competitive on the international market.
At Nissan's Japanese rivals, foreign exchange gains spurred the doubling, and in some cases a fivefold or sixfold increase, in net income during the latest quarter.
Not so at Nissan. The foreign exchange effect was partly wiped out by an 87 percent drop in North American operating profit. Regional profits fell to $32.3 million in the period, from $251.9 million the year before, making North America its least profitable market outside of Europe, where Nissan booked a wider operating loss.
Incentives of $354.5 million undercut operating profit in North America. Total regional selling expenses reached $444.78 million in the quarter, accounting for nearly two-thirds of its global outlays to move cars in the period.
The added spending underscores Nissan's struggle to balance volume growth with profitability. North American unit sales climbed 12 percent to 405,000, while regional revenue surged 33 percent to $10.93 billion.