Japanese automakers have two big challenges facing them at the moment: A stronger yen and declining U.S. auto sales.
According to a report in The Nikkei today, Motley Fool Global Gains selection Nissan Motor
Nissan has assumed an exchange rate of 117 yen to the dollar for its fiscal year. That estimate was conservative through the first four months as the yen hovered between 119 and 123. However, in the last two weeks, the yen has been much stronger and was briefly at 111 yen to the dollar last week, before coming back to about 115 where it has sat most of this week. Barring another big move in the yen, Nissan is in good shape.
A poor U.S. housing market might pose bigger problems. A recent report from CNW Research shows that of consumers who are delaying an automobile purchase, 17.6% of them blamed home-related issues. According to the report, this makes housing the most common reason for delaying an auto purchase. My guess here is that automakers geared more toward trucks and SUVs -- I'm looking at you Ford
While I think housing problems will hurt sales in the U.S. overall, Nissan had a pretty tough 2006 to begin with. And rolling out 10 new models in the U.S this year, including a number of smaller, more affordable cars, helps to explain where some of the optimism about hitting its targets is coming from. Nissan should continue to see growth in China, Russia, and Southeast Asia as well.
This doesn't mean Nissan will have a fantastic year, but a bad 2006 -- with expectations of only a small improvement in 2007 -- makes the company's goals achievable in a tough environment.