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Nissan Motor witnessed a significant decline in its shares, with a plunge of 11.7% on Friday. This drop could potentially be the automaker's most significant selloff since 2001.
According to Channel News Asia, the share decline comes after Nissan trimmed its sales volume forecast for the current financial year, raising concerns about its business in China.
Market Value Takes a Hit, Biggest Single-Day Drop Since 2001
US News reported that the share decline resulted in a loss of approximately $1.8 billion in market value. Nissan is now on track for its largest single-day drop since September 2001, when it fell by more than 12%. The automaker's shares have taken a substantial hit due to the revision in sales outlook and worries about its operations in China.
Despite the downward revision to its sales outlook, Nissan has maintained its annual operating profit view of 620 billion yen ($4.15 billion). The company expects a more profitable product mix to offset the impact of the revised sales forecast, which has been revised to 3.55 million vehicles from the initial estimates of 3.7 million.
Challenges Faced in China Impact Forecast
Speaking at a press briefing following the release of earnings results, Nissan Chief Financial Officer Stephen Ma highlighted the challenges faced by the company, particularly in China. Ma stated, "Especially given what's happening in China, we have revised our full-year forecast." Intensifying competition and logistics issues around key markets are among the challenges faced by Nissan.
Nissan has taken steps to address the 26% fall in nine-month retail sales volume in China. The automaker aims to mitigate the industry's challenges and boost its competitiveness in the world's largest car market. Despite declining sales, overall vehicle sales in China increased 12% last year compared to the previous year, reaching 30.1 million vehicles.
The decline in Nissan's shares reflects the industry-wide challenges experienced by automakers in China. With rising competition and logistics issues, companies reevaluate their forecasts and strategies to navigate the evolving market dynamics. The Chinese automotive market presents immense opportunities but also demands careful consideration and adaptability from industry players.
Photo: John Cameron/Unsplash
