July 27, 2017 7:08 pm JST

Nissan operating profit falls nearly 13% in first quarter

Japanese automaker hopes to cash in on global drive for electric cars

SHOTARO TANI, Nikkei staff writer

Joji Tagawa, corporate vice president of Nissan, speaks during a press conference in Tokyo on July 27.

TOKYO -- Nissan Motor's operating profit fell 12.8% on the year in the quarter ended in June, as higher sales costs took their toll.

The Japanese automaker posted an operating profit of 153.3 billion yen ($1.37 billion) in the first quarter of fiscal 2017, down from 175.8 billion yen the previous year. Increased marketing and sales expenses, as well as higher raw material costs and unfavorable exchange rates ate into its profit. Net income came in at 134.9 billion yen, down 1.1% from a year earlier.

Joji Tagawa, Nissan's corporate vice president, speaking Thursday at a news conference in Yokohama, southwest of Tokyo, said that the results were "in line" with the company's expectations.

One bit of welcome news for the automaker is the global push to move away from gasoline- and diesel-powered cars. Nissan is a leader in the Japanese market for electric vehicles. The British government announced Wednesday plans to ban the sale of conventionally powered cars, starting in 2040, following similar a pledge by France. China, meanwhile, is planning to impose production quotas for "new energy cars" as early as 2018.

Nissan recently revealed that it is developing a low-price compact electric car for city dwellers in China, who tend to drive short distances.

"We said in our midterm plans that we will become a leader in zero-emission [vehicles]," Tagawa said. "It is true that the sales are slower than expected, but it is a plus for us that Tesla is changing customer perceptions about EVs." Tesla is a U.S. manufacturer of electric sports cars.

Tagawa said that as customers experience electric cars, they will realize that worries about cost and vehicle range will prove unfounded. "I think sales of our EVs will pick up in the not-too-distant future. We want to accelerate the electrification trend," he said.

Global competition to lead the market for electrically powered cars is heating up. Chinese-owned Swedish carmaker Volvo has announced that all its new models will have electric motors, starting in 2019, while Honda is aiming for two-thirds of its auto sales in 2030 to be electric and hybrid vehicles.

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