Nissan expects its China sales to beat forecast

Nissan Motor Co., Japan’s third-largest carmaker, said sales in China this year will beat its previous forecast as government stimulus measures spur demand.

Nissan expects to exceed its earlier estimate of 570,000 vehicle sales in China, Takashi Nishibayashi, head of Nissan’s China department, said without providing a new forecast.

The government stimulus programs, mainly set to expire at the end of the year, “have been the tailwind for us,” Nishibayashi said in an interview yesterday. “We are hoping that some sort of assistance to the auto industry continues.”

Nissan and other carmakers are benefiting from tax cuts and government subsidies in Asia’s biggest auto market, which helped car sales in the nation jump a record 90 percent last month. The Yokohama-based automaker forecasts a 170 billion yen ($1.9 billion) loss for the year ending March 31 after the global recession hammered car demand in Japan, Europe and the U.S.

"Nissan is doing well at the moment, but the question is whether this is sustainable after the stimulus program ends," said Yuuki Sakurai, chief executive officer of Fukoku Capital Management Inc., which manages about 800 billion yen in assets in Tokyo. "Also, the profitability of small cars is slim."

Nissan’s sales in China rose 32 percent to 466,219 vehicles in the first eight months of this year, making it the company’s second-biggest market after the U.S. The carmaker plans to increase output at one of its Chinese plants next month.

Tiida, Livina

China has halved the tax on vehicles with engines of 1.6 liters or smaller and given subsidies in rural areas to shield automakers against the global recession. Models accounting for 63 percent of Nissan's China sales, including Tiida compacts and Livina minivans, qualify for the tax cuts, according to company spokesman Akihiro Nakanishi.

Full-year sales of cars, trucks and buses in China may reach 12 million, the government has said, enough to likely surpass the U.S. as the world's largest auto market. Sales of cars, trucks and buses rose 6.7 percent in 2008 to 9.38 million, according to the China Association of Automobile Manufactures.

In the U.S., industrywide car sales rose 1 percent in August, buoyed by the "cash for clunkers" incentive program, while a similar program helped increase sales in Japan 2.3 percent.

Nissan plans to increase annual output to 460,000 vehicles at its plant in Guangzhou from 360,000 units by adding a third shift starting in October. The company and partner Dongfeng Motor Group Co. will also add a new line to increase production to 600,000 at the plant by 2012.