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Mid-term Production Forecast by IHS Global Insight

Nissan Group: Light vehicle production by Country (IHS Global InsightForecast)

(Unit)

	Brand	2008	2009	2010	2011	2012	2013	2014	2015
JAPAN	NISSAN	1,407,672	992,774	1,173,620	1,558,652	1,373,974	1,287,771	1,248,202	1,264,102
	INFINITI	47,946	28,478	53,520	70,483	77,429	76,042	86,160	97,040
CHINA	NISSAN	365,269	535,657	589,884	651,319	669,593	679,378	715,476	742,009
TAIWAN	NISSAN	24,088	26,920	30,632	33,046	38,301	40,384	42,060	45,380
PHILIPPINES	NISSAN	8,704	5,227	6,921	7,411	8,113	9,058	9,984	10,462
INDONESIA	NISSAN	30,636	20,751	26,681	32,118	37,169	41,047	44,574	48,361
MALAYSIA	NISSAN	33,892	23,999	18,454	21,156	21,873	22,815	23,381	25,470
THAILAND	NISSAN	73,727	73,483	109,089	155,001	177,102	178,764	188,878	189,571
INDIA	NISSAN	0	56,742	88,907	146,344	181,893	196,901	196,551	189,176
UNITED STATES	NISSAN	534,721	349,246	465,480	524,077	588,075	639,445	679,714	683,278
	INFINITI	8,522	7,401	2,494	0	0	0	0	0
MEXICO	NISSAN	445,245	358,322	398,330	419,398	496,868	525,775	529,476	525,963
BRAZIL	NISSAN	5,316	18,792	19,879	22,992	23,551	24,234	24,896	24,738
UNITED KINGDOM	NISSAN	390,406	342,028	276,368	253,719	274,171	279,763	335,251	351,680
FRANCE	NISSAN	8,304	2,554	4,045	5,239	7,089	6,692	6,407	6,349
SPAIN	NISSAN	92,722	29,057	61,818	78,922	86,082	116,148	124,079	130,130
RUSSIA	NISSAN	0	3,790	9,505	17,448	30,712	41,622	52,033	56,212
IRAN	NISSAN	74,818	69,845	76,752	71,581	72,829	73,147	82,234	82,946
EGYPT	NISSAN	15,213	14,510	9,600	14,092	16,936	17,695	21,560	18,502
SOUTH AFRICA	NISSAN	45,729	43,595	53,888	65,636	70,778	77,275	84,072	84,893
TOTAL		3,612,930	3,003,171	3,475,867	4,148,634	4,252,538	4,333,956	4,494,988	4,576,262

Source: Global LV Production Data (as of March 19, 2010)
(Note)
1. Data indicate figures of only small-size vehicles, including passenger cars and light commercial vehicles with a gross vehicle weight of under 6 tons.
2. Data for 2009 are based on actual production results, in countries other than the Iran, Egypt and South Africa.
3. All rights reserved. Reproduction of any data will require permission of IHS Global Insight.

IHS Global Insight Report

(04 Mar 2010) - France: Renault CEO Still Looking Out For New Partners, Aiming to Take Advantage of Demand For EVs
Renault's CEO Carlos Ghosn has revealed among comments made at the Geneva Motor Show that the automaker is still on the lookout for another partner and that he expects it to be one of the better placed automakers to take advantage of the growth in demand for EVs over the next few years.

IHS Global Insight Perspective

Significance	Renault's chief executive Carlos Ghosn has said that he is still on the lookout for another partner that could bolster the alliance with Nissan. He also said that he wants Renault to be in a strong position to take advantage of the growth in the EV market.
Implications	Ghosn also mentioned that it is to looking to reduce its debt burden through the eventual sales of non-strategic assets and that it would take a decision on another investment in Russia in due course.
Outlook	The latest comments underline the automaker's commitment to electric vehicles, although given that this is currently a relatively unknown market, it may look to any future partner to share some of the burden in this direction.

Renault's chief executive officer (CEO) Carlos Ghosn has spoken to several media outlets during the 2010 Geneva Motor Show and has made several interesting comments on the future of the French automaker and its Alliance partner Nissan, as well as the automotive industry in general.

One area that was discussed with Automotive News Europe (ANE) was that Renault was still looking to add another partner to add to its existing relationship with Nissan, despite having seen a couple of attempts in the past fall by the wayside. Ghosn told the trade publication "Obviously, we are talking to many people. The name of the game is scale, co-investment and shared technologies. There are a lot of talks." He added "You would be surprised how many people we are talking to about specific co-operations," but refrained from offering names, including whether Renault was in talks with Daimler on a next generation small car platform. The senior executive also expressed his concern that most automakers lack the ability to cover all technology bases and global regions cost-effectively.

Ghosn said it was "impossible" for a smaller automaker to be everywhere including developing markets and to keep up with the wide range of alternative powertrains that are being developed. However, he said "If you can find a third strategic partner, it gives you so much advantage," before saying "The alliance is a group with a reasonable balance sheet and can afford a more aggressive strategy if we need to." He confirmed that Renault-Nissan was not looking for a merger, suggesting that "history shows no mergers survive."

Ghosn also told the Financial Times (FT) that he believed there would be a surge in demand for electric vehicles (EVs) and a rush to build up manufacturing capacity within the next two years. He told the newspaper "If I had to make a bet today, I would say we're going to be very quickly in short capacity for electric cars - From everything I'm seeing, in 2011 or 2012 we're going to have to rush to build capacity for both batteries and cars." He said that Renault and Nissan stood to profit from this as it would be the "only one in the market" in 2011, and was installing capacity for 150,000 units per annum (upa) in Japan, 200,000 upa in Europe, and over 200,000 upa in the United States, adding "We're putting a system in place . who else is doing that?" While he claimed that this was not an offensive, he said that the numbers were starting to stack up with an order for 100,000 electric Fluences from Israel and the French government possibly adding 100,000 to its own vehicle fleet. "The numbers are deep, and I think we're going to need more capacity," but said "we're not going to invest more before we see the reaction of the market."

The senior executive also discussed with the Wall Street Journal (WSJ) the ways that Renault was looking to reduce its debt burden of around 6 billion euro (US$8.2 billion). Although saying "It's not something that threatens us," he added that "we have to get rid of it as quickly as possible" to give itself room to make further investments. Areas the company was looking at were its non-strategic assets. However, he would not be drawn on whether this would include its 20% share in truck-maker Volvo AB, telling the newspaper "Strategic is something which is considered absolutely necessary for you to continue to fulfill your mission for the future - I'll let you draw the conclusion. We're not a truck maker. We think it's a great asset - [but] when you make decisions you have to make decisions about your priorities, about what's more strategic than the rest and how much you really need to liquefy the asset." He also said there was no immediacy over the sale of any assets as "today, assets don't have any decent valuation."

Ghosn revealed that Renault was to decide soon on whether it and Nissan would expand operations in the Far East of Russia. He told Dow Jones International Newswire that the automakers had been requested by the Russian government to consider setting up a completely knocked down (CKD) kit assembly operation in the region. Ghosn said to journalists "We haven't answered it yet. We are analysing it. But we promised [Russian] President [Dmitry] Medvedev we would give him an answer in the coming weeks."

Ghosn has also confirmed that he expected the Renault board to name him as a candidate to lead the French automaker for the next four years at a board meeting on 30 April. Although he had appointed chief operating officers (COOs) at Renault and Nissan, he said "I don't think you should see it as a preparation of a retirement," adding "If you see me among the candidates, you can probably understand that I'm not about to take more distance from the operations."

Outlook and Implications
These statements underline Renault's future strategy. Perhaps the most illuminating is regarding its continuing search for a further partner to bolster its current tie-up with Nissan. While many may consider that the pair now already have a strong geographic spread, with a strong presence in Europe, and Asia and North America with Nissan, as well as having invested greatly in technology to underpin an assault on the potential growth of the electric vehicle market, it seems that this is not necessarily enough. In the past, Ghosn has stated his keenness to gain a partner in the North American market to improve its presence in one of the world's largest vehicle markets.
Previous discussions with General Motors (GM) fell by the wayside, while a relationship with Chrysler was overtaken by the U.S. automaker's own financial events which eventually saw it enter into bankruptcy and be snapped up by Italy's Fiat. While GM could still turn out to be in play for a relationship, there is still a great deal of overlap elsewhere around the world, and the newly reorganised company should be a far stronger proposition, with less need for such a relationship. However, although Ford is the remaining independent North American automaker, it holds this independence dear, partly as a result of the founding family remaining a strong influence. These are not the only options for the automaker, with many other automakers looking to get ahead such as those in developing markets such as China. However, while a single partner may be easier to manage, strength can also be gained by having many individual tie-ups. As already mentioned, Renault continues to be linked to Daimler on a new small car platform that will underpin the next Twingo and Smart.

One bargaining chip which could potentially be attractive to future partners is its expected leadership in the development of electric vehicle powertrains. Renault-Nissan is investing around 4 billion euro in the technology, not just through the research and development (R&D) stage but also with regards to manufacturing and infrastructure. This is a tremendous effort by the business, and a successful roll out over the next year or so has a lot riding on it. While Nissan will launch just one vehicle initially in the Leaf, Renault is taking a far bolder step by launching four separate models by the end of 2012.
Despite what Ghosn may say, this is still an ambitious step, and despite the efforts that the companies have made to encourage government support for its measures it will still require customers to see cost parity with equivalent traditional vehicles and the creation of an infrastructure that can handle the growth in this sector. With this in mind, licensing agreements to spread this risk with another substantial partner in this field make sense, but Renault-
Nissan is unlikely to want to do this unless it can get something substantial in return.

(09 Feb 2010) - Japan: Nissan Records US$503.6-mil. Net Profit in Q3 FY 2009/10, Sales Revenues Increase 9.9% Y/Y
Nissan has announced better-than-expected financial results for the third quarter of fiscal year 2009/10 on the back of recovering sales volumes amid government support measures and drastic cost-cutting initiatives.

IHS Global Insight Perspective

Significance	Nissan swung back to profitability during the third quarter of fiscal year (FY) 2009/10, leading to an improved performance in the year-to-date period despite a fall in sales volumes.
Implications	Nissan attributed its recovery and improved turnover during the third quarter to strong industry support measures from governments in key markets such as the United States, Europe, and China, aided further by its extensive cost-cutting initiatives. However, the unfavourable currency translation effects brought about by the continued appreciation of the Japanese yen against other major global currencies continue to challenge the automaker.
Outlook	Anticipating strong sales during the final quarter of FY 2009/10 on the back of continued government support measures, Nissan has again upgraded its earnings projection for the full year.

Nissan has announced its financial results for the third quarter of fiscal year (FY) 2009/10, showing that profitability recovered significantly during the period. For the three months between October and December 2009, the automaker posted a net profit of ¥45.0 billion (US$503.6 million) on sales revenues of ¥1.996 trillion, up 9.9% year-on-year (y/y). Operating profit for the quarter stood at ¥134.1 billion, compared with a year-earlier loss of ¥99.2 billion, while ordinary profit remained at ¥112.7 billion. Nissan said in its statement that the extensive market support measures by various governments globally, including tax breaks on new compact vehicles and vehicle replacement subsidy programmes, helped increase its turnover and profitability during the third quarter. Further support was provided by the effective execution of counter-measures implemented by Nissan during 2009 to override the after-effects of the global economic downturn.

Nissan also recorded better-than-expected results during the first three quarters of the FY 2009/10, thanks to its strong performance in the third quarter. The company saw its net profits rise 25% y/y to ¥54.0 billion during the nine-month period ending 31 December 2009. However, sales revenues contracted by 19.5% y/y to ¥5.379 trillion, compared with ¥6.686 trillion in the first three quarters of FY 2008/09. Despite this decline in revenues, Nissan witnessed its operating profit surge 147.6% y/y to ¥228.9 billion during the period, compared with a year-earlier profit of ¥92.5 billion. Nissan president and chief executive officer (CEO) Carlos Ghosn said that, "Our performance in the third quarter of FY 2009/10 is encouraging, demonstrating that our countermeasures [to overcome the global economic turmoil] are working. Despite these positive quarterly results, we believe that conditions in the global economy are still volatile and uncertain, so our outlook will remain cautious until we see clear evidence that economic recovery can be sustained in world markets."

Nissan managed to sell around 882,000 vehicles during the third quarter of FY 2009/10, an increase of 20.6% y/y. The automaker added in its statement that overwhelming demand for its vehicles in the fast-expanding Chinese market, along with government support measures in key markets such as the United States and Europe, helped offset losses stemming from unfavourable currency translation effects. However, despite these measures, sales at Nissan fell 4.8% y/y
during the first three quarters of FY 2009/10 to just over 2.5 million units.

Nissan's Financial Results

¥ bil.	Q3 FY 2009/10	Q3 FY 2008/09	Y/Y Change %	YTD FY 2009/10	YTD FY 2008/09	Y/Y Change %
Sales Revenues	1,996.2	1,816.5	9.9	5,379.6	6,686.0	-19.5
Operating Income	134.1	-99.2	-235.2	228.9	92.5	147.6
Net Income	45.0	-83.2	-154.1	54.0	43.2	25.0

Outlook and Implications
The impressive results for Nissan in the first three quarters of FY 2009/10 highlight the effectiveness of the extensive support measures offered in many global markets. Consumer and business confidence in most markets remains fragile, as does the global economic situation, leading to the cautious outlook from Ghosn. The stellar growth for the automaker in fast-expanding markets such as China and the success of its swift cost-cutting measures have further benefited Nissan during last year. However, there is continued pressure from the strengthening of the Japanese yen vis-a-vis other major currencies globally, which will force Nissan to put further emphasis on cost optimisation. Ghosn has already revealed that the company is not looking for potential joint ventures (JVs) to support its future vehicle development plans and will mainly concentrate on improving its profitability.

Nissan's latest financial results also reflect the general improving trend for Japanese vehicle manufacturers in the last quarter, when the multiple government incentives globally finally had a positive effect. Honda last week announced a significant increase in its profitability during the third quarter of FY 2009/10, thanks to swift cost-cutting measures and improved global economic conditions. Rival automaker Toyota also sprung back to profitability during the most recent quarter on the back of its intensive cost-cutting measures.

As part of its current business strategy, Nissan aims to derive maximum advantage from the growing focus on the development and usage of fuel-efficient vehicles and those with alternative powertrains. The automaker plans to begin sales of its first electric vehicle (EV), the Leaf, in the Japanese market before the end of this year, and subsequently in other major global markets such as China over the next few years. Prior to that, Nissan launched / is going to launch a host of new models in different markets, including the new Patrol in the Middle East, the Fuga and Roox minicar in Japan, and the 370Z convertible in the United States, many of which will eventually filter through to other global markets. The company is also banking heavily upon the success of its new Micra/March B-segment model, which will be built simultaneously in China, Thailand, and India this year. In Japan, Nissan is set to launch its first self-developed hybrid model next year, a variant of the newly introduced Fuga. In addition, the company also plans to expand its hybrid line-up by developing its own hybrid technology for smaller cars. As a result, the company is already investing significantly in upgrading existing plants and building new facilities in many Asian countries in an attempt to cater to anticipated demand.

Nissan's Full-Year Financial Forecasts

¥ bil.	Revised FY 2009/10	Previous FY 2009/10	FY 2008/09	Y/Y Change % *
Sales Revenues	7,400.0	7,000.0	8,437.0	-12.3
Operating Income	290.0	120.0	-137.9	-310.3
Net Income	35.0	-40.0	-233.3	-115.0
R&D Expenditure	395.0	395.0	455.5	-13.3
Capital Expenditure	300.0	325.0	383.6	-21.8

* Revised FY 2009/10 compared with FY 2008/09

Meanwhile, although Nissan continues to suffer from the ongoing rise in the Japanese yen against the U.S. dollar, it has still upgraded its full-year earnings outlook for FY 2009/10. The automaker believes that the growing demands for its fuel-efficient vehicles globally and the positive influence on the global vehicle market from the stabilising economic situation will benefit its position over the coming months. Nissan now anticipates the yen to stand at an average of ¥92:US$1 for the year, up from a forecast of ¥95:US$1 when it released its FY 2008/09 results. The company also believes that increased demand for its vehicles and the ongoing cost-cutting measures will continue to offset the unfavourable currency translation effects during the fourth quarter of FY 2009/10. As a result, sales revenues are now expected to stand at ¥7.4 trillion for the full year, while operating profit is now anticipated to total ¥290.0 billion. In addition, Nissan now expects to record a net profit of ¥35 billion during FY 2009/10, compared with a year-earlier loss of ¥233.3 billion.