Despite achieving substantial growth in global sales, Nissan is encountering significant challenges in the Chinese marketThis paradox has become a focal point as the company releases its financial report for the first half of the fiscal year 2023 (from April 1 to September 30, 2023), announcing an increase in projected revenue and profits due to better-than-expected performance.

Although Nissan's overall sales figures show considerable improvement, the Chinese market has become the sole region where the company is experiencing a decline in sales.

In the first half of the year, Nissan reported a combined net revenue of 6.06 trillion yen, marking a year-on-year increase of 30%. The company's operating profit jumped to 336.7 billion yen, which represents a remarkable 115% rise, and the operating profit margin stood at 5.6% with net income reaching 296.2 billion yen, a staggering increase of 359.22% compared to the previous year.

Nissan attributed this surge in revenue and operating profit to improvements in operational performance and an overall increase in global sales

As a result, the company has revised its projections for the fiscal year 2023 upward, expecting an additional 400 billion yen in net revenue, with operating profits increased by 70 billion yen to 620 billion yen and net profits projected to grow by 50 billion yen to 390 billion yen.

As Nissan itself highlighted, the rise in profits is largely due to the increase in global vehicle salesHowever, the troubling situation in the Chinese market remains a concern for the firm.

Data reveals that in the first half of this year, Nissan's passenger car sales in Japan reached 305,000 vehicles, an impressive growth of 47.6%; in the U.S., sales were 298,000, up by 18.4%; while in the U.K., 158,000 vehicles were sold, a rise of 36%. Mexican sales stood at 304,000 units, increasing by 44.6% compared to the previous year.

In stark contrast, Nissan managed to sell only 368,000 vehicles in China, a considerable decline of 25.2%. This drop significantly impacted the company's overall overseas sales, which decreased by 1.4% to 1.346 million vehicles.

Nissan's entrance into the Chinese market was not particularly late

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In 2003, the company formed a joint venture with Dongfeng Group, giving birth to Dongfeng Motor Co., Ltd., which included the establishment of Dongfeng Nissan Passenger Vehicle Company to oversee their passenger car operations.

In 2018, Nissan achieved its highest sales in China, reaching 1.564 million vehicles sold, while rival Japanese automakers Toyota and Honda recorded sales of 1.475 million and 1.432 million vehicles, respectively.

However, the automotive market in China has undergone significant transformations in recent years, particularly due to the surge in new energy vehicles (NEVs) which have disrupted traditional market dynamics.

In 2022, Nissan's sales in China decreased to 1.0452 million vehicles, which was a drop of 22.1% year on year

Specifically, Dongfeng Nissan Passenger Vehicles experienced a decline of 20.9%, selling 897,900 vehicles, marking the first time in seven years that their sales fell below one million.

This decline is not an isolated incidentThroughout 2023, a price-cutting trend has escalated the changes in China's automotive marketFrom January to October, Dongfeng Nissan's cumulative sales were just 585,800 vehicles, representing a year-on-year decrease of 25.86%.

According to Cui Dongshu, Secretary General of the Passenger Car Association, "With the electrification and intelligent transformation of the passenger car industry, the former advantages of joint venture enterprises are weakening, leading to increased pressure on production capacity amidst new challenges for quality growth in this new era."

Nissan has acknowledged these challenges

During a recent earnings conference, Nissan CEO Makoto Uchida candidly stated that the end of subsidies for new energy vehicles in China led to poor performance in the first and second quarters of this year.

"I believe that the Chinese market may not return to its previous high-profit status," Uchida remarked, adding that amidst the decline in sales, Nissan is contemplating how to utilize its parts production lines and ramp up manufacturing in other regions to compensate for the lost revenue.

Senior Vice President Shohei Yamazaki highlighted that in light of the continuously evolving business environment in China, Nissan must ensure sustainable business development while accelerating the introduction of new products.

Indeed, the decline in sales within the Chinese market is intricately tied to Nissan's slow strategic response.

Currently, the electric vehicle models available on the Dongfeng Nissan website include the ARIYA, the Xuan Yi electric drive version e-POWER, the Qichen D V DD-i super hybrid, and others

However, only the ARIYA is a pure electric model, and its sales performance has been disappointing.

Recent data indicates that from January to September this year, the ARIYA sold just 1,719 units, averaging fewer than 200 units per month, with the highest monthly sales struggling to reach 500 units.

Given the current wave of electric vehicle enthusiasm sweeping across the Chinese automotive market, many analysts believe that Nissan's sluggish rollout of electrified products is a key factor contributing to its declining sales.

During the recent China International Import Expo, Nissan showcased several products, but it was reported that none were new models

Company representatives expressed that Nissan is lagging behind compared to local automakers, prompting a decision to shift strategies to accelerate their catch-up effort.

In an effort to navigate out of the current predicament, Dongfeng recently held a new strategic press conference to send out positive signals to the market.

On November 11, at the "2023 Dongfeng Motor Co., LtdNew Strategy" conference, Shohei Yamazaki announced that by the end of 2026, Nissan plans to launch ten locally developed new energy vehicles in the Chinese market, covering brands including Nissan, Qichen, and DongfengNotably, four of these will be under the Nissan brand, with the first self-developed Nissan electric vehicle set for release in the second half of next year.

In response to the increasingly competitive landscape in China, Dongfeng aims to expand its targets internationally