DETROIT � While General Motors' second-quarter loss was a whopper, the Detroit automaker isn't the only one struggling. Nissan and BMW reported Friday that their profits are taking a hit as well.
Nissan reported its profits fell 43 percent in its first fiscal quarter that ended June 30. That was a more significant drop than analysts had predicted. Nissan blamed the negative impact of foreign exchange rates from the strong yen and losses on vehicles coming off lease at lower-than-planned resale values in the U.S. and Canada for the decline.
Nissan CEO Carlos Ghosn said the automaker's outlook for the industry remains a cautious one. He noted Nissan has made adjustments in its plans to accommodate the weak market. On Wednesday, Nissan announced it was offering an attractive buyout program to its 6,600 workers at two plants in Tennessee in hopes of eliminating 1,200 jobs. Nissan also announced earlier this year the elimination of Nissan Titan production on its own; Chrysler will build the Titan replacement from its Dodge Ram platform.
BMW said its profits fell 33 percent. BMW executives warned the automaker won't earn as much as it had originally planned for the full year of 2008 and expects 2009 to be similarly difficult. Last week, Daimler issued a similar warning.
BMW said it is being clobbered by soaring raw materials costs and ballooning reserves required to cover vehicles coming in off lease at lower-than-anticipated resale values. BMW said slumping used car prices have forced it to more than double the amount of money it puts in reserve to cover vehicles coming off lease.
As a result, BMW further announced it will not move forward in building its X7, what had been planned as its largest, flagship SUV, largely due to $4-a-gallon gas that has pummeled that market segment. BMW also said it will scale back its U.S. sales efforts and shift 40,000 vehicles to more lucrative overseas markets.
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