Nissan Motor's vehicle profits in mainland China, the automaker's most important market plunged a whopping 80 percent in February as growing fears from the coronavirus impaired demand, dealing a painful blow to the company already struggling to bounce back from a revenue free-fall.
The global health crisis is threatening to eradicate 35 percent off the Japanese auto company's yearly sales, putting its splintered partnership with Renault under critical financial condition.
Based on figures by the China Passenger Car Association, new auto sales in the country dropped more than a third year-on-year in February this year, marking the biggest monthly decline on record as virus jitters kept distributor floor traffic very low.
Nissan disclosed on Monday that it had delivered only 15,111 cars last month in the globe's largest auto market as demand for its Sylphy Sedan and X-Trail and Qashqai sport utility vehicles continued to fall.
The company has been relying on growth in China to offset the negative impact from its collapsing operations in Japan and the US, where auto sales tumbled 28 percent in February.
Market observers estimate that a slump in China could push the world's third-biggest automotive conglomerate to layoff more personnel, shut down more facilities and sell off assets in a bid to resuscitate a 21-year-old partnership that will create new survival measures in the coming weeks.
The latest data indicate that commercial car sales in China plunged almost 42 percent in the first two months this year, showing the biggest sales slump in 20 years.
But commuting restrictions and road blockades in many regions in the the country has led to a decline in output since February, heavily affecting orders and elevated risks to the company's worldwide supply chain.
As doubts about the virus outbreak jolt the financial markets, demand in the world's second-biggest economy is seen to remain sluggish in the short- to medium-term, which could further add to the stress in profits of other global auto manufacturers.
"We are currently witnessing a specific moment when the challenge for the partnership is very quite difficult," Jean Dominique Senard, Renault chairman, who is also executive at Nissan's board of directors, said.
Nissan has already been grappling with declining orders and plunging profits in the last two years and the company's new executive organization could come under heavy strain to impose a deeper cost reductions as part of its badly-needed recovery strategy, which is expected in the next two months.
