Nissan Motor Co, the third-biggest automaker in Japan, will likely raise domestic prices for its vehicles as soaring prices for steel and other raw materials boost production costs, chief executive Carlos Ghosn said yesterday.
Ghosn, speaking to reporters after a shareholders meeting, said price increases were probably inevitable in Japan, following those already announced in the US and Europe. He said Nissan may have to raise their prices 2 percent or 3 percent.
He predicted that all Japanese automakers would be forced to raise prices, especially as steel costs are expected to keep climbing — although it would be hard for Nissan to be the first to do so when rivals like Toyota and Honda haven’t.
“In pricing, the industry has no choice,” Ghosn said after addressing more than 2,000 shareholders gathered at a convention center in Yokohama, southwest of Tokyo. “At the end of the day, we are sure everyone is going to do it.”
Nissan, as well as Toyota and other manufacturers, have already raised the US prices of several models.
Japanese automakers, while faring better than US rivals General Motors Corp or Ford Motor Co, are all struggling to maintain profits amid a stronger yen, higher material costs and sluggish US and Japanese markets.
Earlier in the day, Ghosn sought to allay fears about the company’s declining share price, saying the fall was because of soaring oil costs, a US economic slowdown and other factors that were hurting all automakers.
Ghosn, who also serves as head of the Japanese automaker’s alliance partner Renault SA, told the shareholders’ meeting that a stagnant Japanese auto market and rising steel and materials costs were also to blame for the company’s falling share price.
Nissan shares have fallen 37 percent over the last 18 months and 14 percent since the start of the year. They inched up to ¥899 (US$8.33) yesterday.
In outlining Nissan’s five-year plan through 2012, Ghosn vowed that Nissan would continue to grow in the years ahead by expanding in emerging markets such as China, Russia, India and Brazil. He acknowledged, however, that the same kind of growth cannot be expected in the traditional markets of the US, Europe and Japan.
He said Nissan’s strategies would not be changed because of share fluctuations.
He outlined to shareholders some of those strategies, including Nissan’s cheap “entry-level car,” promised for 2011, to respond to the needs of emerging markets.
The company is also working on a zero-emission electric vehicle to address ecological concerns, Ghosn said.
“I don’t think what we are seeing today is related to the performance of the company,” Ghosn said in response to a shareholder’s question about Nissan’s faltering stock price.
He pointed out that Toyota Motor Corp’s stock was down 15 percent this year. The entire Japanese stock market was also suffering, he said.
Shareholders, with 99 percent of the vote, approved ¥390 million (US$3.6 million) bonuses for nine directors for the fiscal year just ended.
Ghosn acknowledged Nissan’s executive pay was far higher than the compensation at Toyota, but he said that was because Toyota executives were almost all Japanese, while a quarter of those at Nissan were non-Japanese, requiring that their pay reflect “global standards.”
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