Nissan Downgraded Because Of U.S., China, But European Losses Mount

&l;p&g;&l;img class=&q;dam-image getty size-large wp-image-914122888&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/914122888/960×0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; Nissan Qashqai, the most popular SUV in Europe.

Nissan of Japan&a;rsquo;s credit rating was downgraded last week by Standard &a;amp; Poors because of its creaking performance in the U.S. and China, but Europe is now becoming a cause for concern as sales dive and losses deepen.

The European model range is showing signs of age, and needs sharpening up.

Nissan Europe lost 7.3 billion yen ($65.9 million) in its 3&l;sup&g;rd&l;/sup&g; quarter ended December 31 compared with an operating profit of 2.0 billion yen ($18 million) in the same period of 2017. For the nine months, losses mounted to 24.2 billion yen ($219 million) compared with a loss of 3.3 billion yen ($30 million).

Nissan sales in Europe meanwhile fell 12.8% to 493,862 in 2018, compared with the previous year, according to the European Car Manufacturers Association. Nissan includes Russia in its European accounts. In January sales fell 25%.

Nissan Europe didn&a;rsquo;t want to comment on the reason for mounting losses, but had this to say.

&l;img class=&q;dam-image getty size-large wp-image-1130645735&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/1130645735/960×0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; Nissan Juke.

&a;ldquo;Western Europe sales volumes reflect a number of headwinds impacting the industry this year, including challenges in the diesel market and a downward trend in some major markets. As previously communicated, Nissan is transitioning to a new range of powertrains, with a short-term planned reduction in powertrain supply and volumes,&a;rdquo; Nissan said in a statement.

Nissan was in the headlines in Britain recently, when it decided to cancel a plan to make the new X-Trail SUV at its Sunderland, England plant. This was caught up in the ongoing Brexit controversy, and Nissan had to forcefully maintain that the decision was down to the need to fit the new X-Trail with new engines because the planned diesels fell foul of Europe&a;rsquo;s mounting efforts to persuade buyers to shun them. The Sunderland plant also makes the Qashqai, Juke, electric Leaf, and the Infiniti Q30 and QX30.

&l;img class=&q;dam-image getty size-large wp-image-1048369588&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/1048369588/960×0.jpg?fit=scale&q; data-height=&q;639&q; data-width=&q;960&q;&g; Nissan Pulsar.

Nissan has ridden a wave of success in Europe with its big selling Qashqai SUV and the smaller Juke. But this is getting harder to maintain, according to media reports, as Nissan was slow to improve Qashqai engines and update the Juke. The Pulsar family hatchback only lasted 4 years, while the Note, Nissan&a;rsquo;s answer to the Honda Fit, was also killed.

Felipe Munoz, global automotive&a;nbsp;analyst&a;nbsp;at&a;nbsp;JATO&a;nbsp;Dynamics, said Europe is an important market for Nissan, but not crucial. Sales in Europe, in which Nissan also includes Russia, South Africa, and Turkey, counted for around 14% of total global sales of Nissan/Infiniti/Datsun in 2018. That is less than half the importance of the U.S. with 30%, and China&a;rsquo;s 25%, Munoz said.

Munoz says Nissan Europe&a;rsquo;s losses reflect problems with the model lineup.

&l;img class=&q;dam-image getty size-large wp-image-510079144&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/510079144/960×0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; Nissan Note compact minivan.

&a;ldquo;The brand has strongly concentrated on the Qashqai model only. It is a very popular model, and Europe&a;rsquo;s top selling SUV, but it is now 5 years old, which means its sales don&a;rsquo;t post strong growth anymore. Besides, the Qashqai is now facing more rivals, which are more modern .

&a;ldquo;The Juke was launched in 2011 and a second generation is taking longer than expected. It sits in the B-SUV (compact SUV, like the Renault Captur, Vauxhall-Opel Mokka, Ford EcoSport, Peugeot 2008, Fiat 500X) segment, which is one of the main drivers of growth of the European car market, but has become very competitive, with Volkswagen Group (VW T-Cross) arriving late but doing very well.

&l;img class=&q;dam-image getty size-large wp-image-598716514&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/598716514/960×0.jpg?fit=scale&q; data-height=&q;639&q; data-width=&q;960&q;&g; Nissan Leaf electric car.

&a;ldquo;The X-Trail, which used to lead in the midsize SUV segment, is now getting old and is finally dealing with real rivals like the Skoda Kodiaq, Peugeot 5008 and VW Tiguan.&a;nbsp; The Pulsar never worked out as planned, so the company focused its efforts on another compact: the Leaf. It is succeeding but as an electric model and has some limitations in terms of price,&a;rdquo; Munoz said.

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