Crumple Zone

Nissan hits a wall

Image source: Nick Starichenko, Grisha Bruev, Edijs Volcjoks - Shutterstock

What's going on?

Japanese automaker Nissan warned that this year’s profit would be its lowest in over a decade on Tuesday – while the world’s biggest car company, German rival Volkswagen, made some positive emissions (for a change).

What does this mean?

Nissan expects its annual profit will give up the Ghosn and fall 28% from the year prior (after falling 45% the year before that), with the firm’s jailbird ex-leader partly to blame. Especially challenging is the US, where reversing the company’s previous heavy discounting to attract customers will probably deflate sales further.

Volkswagen, meanwhile, announced plans to start making batteries for electric vehicles and ditch building diesel engines for ships and power stations. And the wheeler-dealer dusted off plans to focus on four tires rather than 18 by spinning off its trucks segment. After initially shelving that gambit just two months ago, Volkswagen’s trucks business is now set to be the largest German stock market listing this year.

Why should I care?

For markets: Tariffs drive automakers round the bend.

European automakers are caught between a rock and a tariffed place: Chinese import taxes introduced last year on cars made in the US crumpled already falling demand, hitting Daimler, Volkswagen, and BMW, which produce over 60% of the vehicles exported to China from America. And the US has also put a target on Europe’s back: it will decide whether to raise import taxes on US-bound European cars later this week. Europe now has its own retaliatory tariffs ready, which sounds familiar

The bigger picture: Steelmakers steel themselves.

Autos disruption reverberates through the supply chain, and weak automaker demand for steel-bodied cars hit German steelmonger ThyssenKrupp, which reported a quarterly loss on Tuesday. Adding insult to injury, the company’s plans to merge its steel business with Indian rival Tata Steel melted away last week after competition regulators looked likely to beat them back.

Originally posted as part of the Finimize daily email.

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