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Nissan's Ghosn sees no 2009 US auto recovery

Automotive

Nissan Motor Co does not expect US. auto sales to bounce back in 2009 after a sharp decline this year, Nissan Chief Executive Carlos Ghosn said.

Ghosn said Nissan expected industry-wide US sales to be near 14.3 million units in 2008, down from 16.15 million in 2007. Next year's tally would be about the same at 14.3 million, he said, adding that the risk was for a lower figure.

“Please be prepared to see a changing forecast,” Ghosn told reporters “I think we are going to have a challenging couple of years.”

Ghosn pursued an unsuccessful partnership bid with GM in 2006 and has said in the past that Renault-Nissan would welcome a North American partner to round out its alliance, spurring speculation of potential tie-ups with Ford Motor Co or Chrysler LLC.

But Ghosn cautioned on Tuesday that the industry's downturn and volatile commodity prices had made equity-based deals harder to complete.

“Today, obviously, the market conditions are very uncertain, so the likelihood of moves now is relatively small because we need to understand what we're buying,” he said.

In any case, Ghosn said Nissan-Renault would never be involved in an outright acquisition of another automaker.

“When people talk about consolidation they talk about Company A buying Company B,” he said. “But we know this doesn't work in our industry. Company A buying Company B is guaranteed to destroy value.”

Nissan has gained market share in a declining US market. The Japanese automaker's sales were down 2.4% in the first half compared with a 10.1% drop for the market overall.

In response to the dramatic consumer shift toward cars and away from heavier trucks and SUVs, Nissan has already adjusted production at its Canton, Mississippi plant.

The automaker has added a third shift of workers on the Canton plant's car assembly line in order to make more Altima sedans and cut a shift at the same plant's truck line which makes SUVs such as the Pathfinder and Armada.

“The market has changed dramatically,” Ghosn said. He added: “For the past few weeks, it looked like the only car you could sell in the United States was a four-cylinder.”

Ghosn, who was speaking at a ceremony to mark the opening of Nissan's new $100 million headquarters building in Nashville, said more adjustments to boost car production and cut truck output could be needed.

“If this market stays as it is - as is likely - you are going to see more of our capacity shifted.”

Nissan began 2008 prepared for a downturn but had not anticipated the extent of the industry-wide US sales slide or the sharp declines in resale values of larger used vehicles that came with it.

That shift in used-car prices has hurt major automakers and finance companies because SUVs coming off lease contracts are being resold for less than had been forecast in the lease.

The resulting losses have to be covered by financial reserves. Ghosn said the amount of reserves needed for Nissan had been “the only surprise” of the downturn for Nissan.

Ghosn also serves as CEO of Renault SA, the French automaker that has a 44% stake in Nissan. Taken together, the two companies make up the world's fourth largest car group by sales.

On a more limited basis, Ghosn said Nissan's product specific tie-up with Chrysler LLC announced earlier this year would sharply cut truck development costs for Nissan.

Nissan has pledged to build a small car for Chrysler using the North American automaker's design in 2010, and Chrysler would build a new full-sized pickup truck for Nissan in 2011.

Ghosn said that would cut development costs for the next-generation Titan pickup truck to one-quarter of what they would have been otherwise. (Reuters)

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