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4-Traders Homepage  >  Equities  >  Tokyo  >  Nissan Motor Co Ltd    7201   JP3672400003

NISSAN MOTOR CO LTD (7201)
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Investors ignore U.S. auto sales outlook, bet on pickups and SUVs

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01/03/2018 | 10:47pm CET
FILE PHOTO: New cars are displayed for sale at a Chevrolet dealership in National City, California

Most major automakers on Wednesday reported lower December U.S. sales and forecast weaker overall sales in 2018, but investors bid up shares in the sector on a bet that high-margin pickup trucks and SUVs will pull Detroit's automakers through any downturn.

The December numbers were above analyst expectations, lifting the shares of General Motors Co (>> General Motors Corporation), Ford Motor Co (>> Ford Motor Company) and Fiat Chrysler Automobiles NV (>> Fiat Chrysler Automobiles). According to Autodata Corp, which tracks industry sales, the seasonally adjusted annualized rate (SAAR) of U.S. car and light truck sales in December fell to 17.9 million units from 18.2 million in December 2016.

Analysts polled by Reuters had predicted a SAAR for December of 17.5 million units.

Investors were pleased GM had cut its inventory of unsold vehicles - a concern for the industry earlier in 2017 - at the end of December to 63 days supply unsold vehicles, beating its target of around 70 days supply.

But GM said it expects the industry to sell less than 17 million new vehicles in 2018. According Autodata, 2017 full-year sales hit 17.23 million units, down nearly 2 percent from an all-time U.S. record of 17.55 million units in 2016.

Automakers' challenges in 2018 include dealing with an ongoing shift in consumer preference away from passenger cars to more profitable pickup trucks and SUVs, and an influx of millions of nearly-new, off-lease vehicles that are cheaper than new vehicles.

Automakers are still assessing the potential impacts of rising interest rates and the sweeping tax overhaul passed by the Republican-controlled U.S. Congress last month.

Charlie Chesbrough, chief economist at Cox Automotive, owner of the Autotrader online automobile market and Kelley Blue Book car valuation service, said the group expects 2018 sales to hit 16.7 million units and rising interest rates are one of the industry's challenges this year as they increase monthly car payments.

"That's real money to consumers," Chesbrough said on a conference call.

Ford chief economist Emily Kolinski Morris said on a conference call that interest rates are a "headwind, but a very minor one."

Tax cuts, however, should be a "net positive" for the industry, she added.

Scott Keogh, U.S. head of Audi AG (>> Audi AG), said that while tax cuts would help luxury consumers, new federal limits on local and state tax deductions could hurt sales in New York and Los Angeles, the two largest American luxury vehicle markets.

Consumer discounts also remain a concern for the industry. Discounts of more than 10 percent of a vehicle's sticker price can hurt resale values, in turn weighing on new vehicle sales. In December, auto consultancies J.D. Power and LMC estimated discounts had topped 10 percent for the 17th time in the last 18 months.

Mark Wakefield, global co-head of automotive and industrial consulting at consultancy AlixPartners LLP - which expects U.S. industry sales to drop to 16.6 million in 2018 - said so far high discounts have not hurt automakers too much, but pricing discipline is a real concern moving forward.

"What we're really nervous about is if someone defects and adds $1,000 to the hood... and forces others to respond to protect market share," Wakefield said.

GM reported a 3.3 percent drop in sales in December, driven by a decline in lower-margin fleet sales to government agencies and rental car companies. GM's retail sales were up 1.8 percent.

The automaker said its average transaction price hit $35,400 in 2017, above the industry average of $31,600.

Ford reported a 0.9 percent increase in sales for December, fueled by a 17 percent increase in fleet sales. The No. 2 U.S. automaker said its retail sales were down 4 percent.

GM shares closed up 2.4 percent, Ford shares ended up 0.8 percent and Fiat Chrysler closed up 2.4 percent.

Fiat Chrysler posted an 11 percent sales decrease, with retail sales dropping 3 percent. Fleet sales slumped 42 percent, in line with a company strategy over the last year to cut back on this low-margin way to unload product.

Toyota Motor Corp (>> Toyota Motor Corp) said its sales fell 8.3 percent in December, with decreases across all segments.

Honda Motor Co Ltd (>> Honda Motor Co Ltd) posted a 7 percent drop in sales in December, driven mostly by declining passenger car sales.

Nissan Motor Co Ltd (>> Nissan Motor Co Ltd) reported a 9.5 percent drop in sales.

(Reporting by Nick Carey; Editing by Meredith Mazzilli and Tom Brown)

By Nick Carey

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Financials ( JPY)
Sales 2018 11 914 B
EBIT 2018 -
Net income 2018 573 B
Debt 2018 6 749 B
Yield 2018 4,59%
P/E ratio 2018 7,92
P/E ratio 2019 7,29
EV / Sales 2018 0,98x
EV / Sales 2019 0,95x
Capitalization 4 871 B
Chart NISSAN MOTOR CO LTD
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Nissan Motor Co Ltd Technical Analysis Chart | 7201 | JP3672400003 | 4-Traders
Technical analysis trends NISSAN MOTOR CO LTD
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TrendsBullishNeutralNeutral
Income Statement Evolution
Consensus
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Mean consensus HOLD
Number of Analysts 21
Average target price 1 287  JPY
Spread / Average Target 11%
EPS Revisions
Managers
NameTitle
Hiroto Saikawa Vice Chairman, President & Chief Executive Officer
Carlos Ghosn Bichara Chairman
Joseph G. Peter CFO, Head-Investor Relations & Accounting
Takao Asami Senior Managing Executive Officer & Head-Research
Toshiyuki Shiga Vice Chairman
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