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Steel cost has Nissan weighing price rise
Contact nowNissan Motor is likely to raise prices for its vehicles in Japan to offset a rapid increase in the price of steel and other raw materials, the company's chief executive, Carlos Ghosn, said Wednesday.
Ghosn, speaking to reporters after a shareholders' meeting, said price increases were probably inevitable in Japan, following those already announced in the United States and Europe. He said Nissan might have to raise its prices 2 percent or 3 percent.
He predicted that all Japanese automakers would be forced to raise prices, especially as steel costs were expected to keep climbing - although it would be hard for Nissan to be the first to do so when rivals like Toyota and Honda had not.
"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 U.S. prices of some models.
Japanese automakers, while faring better than U.S. rivals like General Motors and Ford Motor, are all struggling to maintain profits amid a stronger yen, higher material costs and sluggish U.S. and Japanese markets.
Ghosn said that industrywide sales in the United States could fall well below 15 million vehicles this year and that he expected steel companies to begin another round of price hike talks.
Many analysts have also predicted that sales would fall below 15 million units this year as high gasoline prices and a sluggish economy cut into demand.
"If we take the trend of the market in May and June it looks like we are going to be much below 15 million," Ghosn said. "Now I'm not sure if this is going to continue for the rest of year. We are preparing ourselves for the worst."
Ghosn said that he expected Nissan's U.S. market share to rise, however, thanks to its full lineup of models, including fuel-efficient cars.
Ghosn, who is also chief executive at Nissan's biggest shareholder, Renault, said he expected steel makers to initiate another round of price hike talks.
"And if it's not going to happen in 2008, it's going to come in 2009, and it's going to be messy," he said.
Earlier Wednesday, Ghosn had sought to allay fears about the company's declining share price, saying that the fall was due to soaring oil costs, a U.S. economic slowdown and other factors that were hurting all automakers.
Ghosn 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 past 18 months and 14 percent since the start of the year. On Wednesday, they inched up to close at ¥899, or $8.33, in Tokyo trading.
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 like China, Russia, India and Brazil.
He acknowledged, however, that the same kind of growth could not be expected in the traditional markets of the United States, Europe and Japan.
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