EDITOR'S NOTE: This story has been corrected to note that Nissan halted sales of Mitsubishi-built minicars after faulty fuel economy ratings, not emissions tests.
YOKOHAMA, Japan -- With currency changes cutting into its earnings, Nissan Motor Co. is backing away from CEO Carlos Ghosn's bold goal of an 8 percent operating profit margin by next March.
Profits are also being undercut by falling sales in the home market, triggered by a stop-sale of minicars involved in an emissions-testing scandal, the automaker said last week with the release of its quarterly earnings, and by rising incentives in the United States to move passenger vehicles such as the Versa and Altima sedans.
Corporate Vice President Joji Tagawa said last week that Nissan also is withdrawing its much publicized goal of reaching an 8 percent global market share by the end of this fiscal year, March 31, 2017.
"In this fiscal year, we are not thinking of achieving it." Tagawa said.
Ghosn has made statements in the past year to acknowledge that his 8 percent market share goal might take longer to achieve. But he indicated no flexibility on his 8 percent operating profit objective.
As recently as last autumn, he warned that heads could roll if the Japanese carmaker misses his operating profit margin target.
"Eight percent operating margin is a commitment. This is a clean-houser," Ghosn said at the time, referring to a need to broom staff if the company falls short.
Nissan is getting close -- operating margin expanded to 7.2 percent in the latest quarter, from 7.0 percent a year earlier.
But the pace of improvement will make it difficult to deliver Ghosn's goals, the automaker has conceded.
Tagawa said the appreciation of the Japanese yen is slowing Nissan's march to the goal, contained in Ghosn's so-called Power 88 midterm business plan.
"Through the fiscal year, it may be difficult to attain 8 percent," Tagawa said on Wednesday, July 27, while announcing fiscal first-quarter earnings results.
Ghosn announced the Power 88 midterm goals in June 2011.
A worsening foreign exchange equation is expected to wreak havoc on Japanese automakers' bottom lines this earnings season.