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By Daniel Leussink
TOKYO (Reuters) -Nissan's new chief executive Ivan Espinosa faces an uphill task turning around the troubled Japanese automaker with no guarantee it can reverse sliding top-line sales, analysts said, even as he moves to slash costs.
With a lack of fresh models, new tariffs in its biggest market, and sharp competition from local and Chinese rivals, Nissan will be hard-pressed to shore up sales, which have plunged 42% since the 2017 business year.
Espinosa unveiled plans on Tuesday to cut 11,000 more jobs and shut seven plants and flagged that sales volume was expected to drop 3% in the current fiscal year, as performance in its key markets continues to come under pressure.
It expected sales in China to plunge 18%, while sales in North America and Japan are projected to stay nearly flat.
"They don't have a hybrid lineup. Their BEVs are not particularly successful," said Julie Boote, an analyst at research firm Pelham Smithers Associates, referring to battery-powered electric vehicles and Nissan's offerings in the U.S.
"They will have to work on new model launches, but that takes time, and there's no guarantee that they will be more successful than before."
Espinosa has promised to dramatically shorten vehicle development times and centre its strategy in the U.S., its most important market, around crossovers and sport utility vehicles.
"We understand that a sustainable recovery cannot rely solely on cost reductions. It must also be supported by strong product offerings," he said.
As part of the strategy, Nissan will start offering a plug-in hybrid version of the Rogue SUV, its top-selling U.S. vehicle, in North America this fiscal year by jointly developing it with its partner Mitsubishi Motors.
Another hybrid version of the vehicle will be launched in the next fiscal year and will be equipped with Nissan's e-Power hybrid technology.
Boote said she was not convinced of the strategy's success, cautioning plug-in hybrids do not generate the same level of demand as pure hybrid models.
"They will need to introduce attractive products to achieve this goal," said Masahiro Akita, a senior analyst at Bernstein, referring to expanding its top line growth.
TARIFF AND MARGIN CHALLENGES
New U.S. tariffs on imported cars and car parts complicate Nissan's plan to keep its sales decline at just 3% to 3.25 million vehicles in the current business year and its need to turn around shrinking margins.
Not only do the tariffs mean it may have to hike selling prices in the U.S., but they also raise input costs for its manufacturing plants there.