Nissan forecasts Datsun posting up to 7% operating margins

Article by Anita Panait, on January 14, 2014

Nissan Motor Corp. expects its Datsun brand to post operating margins up to 7 percent due to its no-frills designs and via the sharing of its development facilities and distribution network. Datsun chief Vincent Cobee told Bloomberg in an interview that the brand will likely average between 4 percent and 7 percent of revenue through its life cycle.

He noted that profitability of Datsun cars will depend on the markets where they are being sold as well as other factors. The brand may help establish the direction of Nissan's overall earnings as the Japanese carmaker is relying on Datsun to account for at least a third of its total deliveries in emerging markets such as India and Indonesia.

Datsun is targeting emerging markets with cars costing less than $6,500, while the Nissan brand is aimed at mainstream motorists and Infiniti seeks the high-end market.

"The future growth in auto market will come mainly from emerging countries," Koji Endo, an auto analyst at Advanced Research Japan, told Bloomberg.

He described Datsun as a touchstone for not only Nissan but also the auto industry of how to generate earnings from low-cost cars in emerging markets. He noted that low-cost cars in emerging markets would typically generate operating margins of 2 percent to 3 percent at most.

Nissan chief executive Carlos Ghosn wants to increase the carmaker’s overall operating margin to 8 percent by March 2017. The margin dropped to 5.4 percent in the year ended March 2013 from 5.8 percent a year before. According to Cobee, total deliveries in India, Indonesia and Russia will likely reach 400,000 units in three years. 

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Topics: nissan, datsun

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