Russia is a basket case, Europe is heading from one crisis to the next, China is not what it used to be, Japan has seen better days, South America is ailing. One would think these untoward tendencies leave their mark on global automakers. Think again. Last week Toyota, and today its Yokohama peer Nissan were able to report glorious results. This because they received aid from an accidental ally: America. Strong U.S. sales, and an even stronger U.S. dollar bolster books.
Nissan surprised analysts today by nearly doubling its October-December operating profit to 156.0 billion yen. Nine months into the current fiscal, Nissan’s net income is up 23.6 percent to 338.8 billion yen on “solid US sales, cost efficiencies and favorable currency movements,” as the press release handed out in the 8th floor meeting room of Nissan’s global headquarters in Yokohama said.
In Nissan’s largest market North America, sales rose 12.3 percent in the past nine months. The sales were amplified by a rising dollar. In the same 9 month period, the greenback rose 13 percent against the yen, 17 percent against the euro, and 13 percent against a basket of major currencies.
The strength of the dollar becomes a weakness of American automakers: Cars can be imported more cheaply. At the same time, cars exported abroad translate into fewer dollars. Detroit’s carmakers usually aren’t as big in the export department as its European, Japanese and Korean competitors. Newcomer Tesla was banking big on exports of its electric cars after its U.S. sales have leveled off a while ago. The strong greenback doesn’t help Tesla.
The dollar is expected to stay strong for a while. This enabled Nissan to raise its profit guidance for the full fiscal ending on March 31, while taking down its unit sales forecast a notch.