Ladies and gentlemen, as it is time, we'd like to start the presentation of the financial results for Nissan Motor Company for the 2020. We are very grateful for the very large number of participants that are connected to the system. In the light of the recent situation, we would like to have today's press conference based on Internet system as well as live distribution. But appreciate your kind understanding. First, I would like to introduce the attendees from our side.
First, Mr. Makoto Chirra, CEO Mr. Ashuwani Gupta, COO, Chief Operating Officer and Mr. Steven Ma, who is our CFO, Chief Financial Officer. So we look forward to your participation.
I would now like to invite Mr. Uchida to say a few words. Mr. Uchida, the floor is yours.
Thank you for joining us today. Before we begin, I would like to express our sincere gratitude to all those around the world who had been hard at work every day managing the impact of the COVID-nineteen pandemic. COVID-nineteen cases are surging in many regions, but especially in Europe and The United States. Nissan places the highest priority on the health and safety of all those who we work with and serve, including our customers, staff and their families, dealers and suppliers. We are doing our utmost to prevent infections while running our operations.
Nissan launched Nissan Next in May with a clear focus on immediate recovery while putting the business back on the path to growth. I am pleased to announce that Nissan has made steady progress in the past six months. COO Ashuwani san will now present the highlights of our performance and financial results for the second quarter and the 2020. Then I will discuss the outlook for the full fiscal year. Ashuwani san, over to you.
Thank you, Chita san. We will explain now the results of 2020 and we will start with an overview on the business performance. When we look at the global automotive market trend, especially during the pandemic and post pandemic, the global auto markets are rewinding back and in twenty twenty September they are at same level as last year in 2019. If you look at deeply into the three core markets in China since April, the markets are higher than last year. In United States in September 2020 the markets are at same level of last year however in Japan we still see that markets are behind than last year.
During the pandemic and post pandemic, the priority for Nissan number one was people safety, number two was cash security and we focused on three things during the pandemic and post pandemic. The first is our production plans. Following the global market trend, In September, our production plants globally are at 87% of last year which are growing to above 100% in December which demonstrate the fact that our production is following the global automotive trend. The second thing is about customer touch points. Globally, we are at 98% of our dealerships which are fully operational.
Nissan took the opportunity to capitalize the digital platform to have the seamless customer experience. In H1, Nissan sold 161,000 cars utilizing the digital experience, which is 11.5% of our sales in H1. Using this experience also, we saw significant change in the customer behavior. For example, in China, 33% of our cars went through the digital experience whereas in United States, we see reduction in the transaction from purchasing consideration to the real purchase. Post pandemic, this has become a new normal and Nissan is going to deploy globally the digital customer experience.
As the new products with the new technologies are the foundation for bringing the sustainable profitable growth in Nissan NEXT as we announced in May. We could start the production of six key models globally and I would like to say thanks to our employees, suppliers, dealers and all the stakeholders who helped us during the crisis to launch these productions. We launched all new ROGUE in Japan. We launched all new Sentra in Mexico. We launched all new Kix e Power.
We started the production of all new ROGUE in Japan and United States, new Navara in Thailand and all new Nissan Magnite in India. Now let's look at the three core markets business performance for Nissan. At first, because of pandemic, let's see the recovery of Nissan from Q1 to Q2. When we look at the global automotive market, the global market grew by 62.8% when Nissan retail sales increased by 64.1%. When we look at the retail markets, China grew by 77.8% whereas Nissan grew by 88.7%.
In Japan, the market grew by 42.6% and Nissan increased by 43.1%. And North America where we decided to focus on quality of sales, the North American market grew by 31.7% in retail and Nissan grew by 34% in retail. However, The US fleet market grew by 50.4% but the Nissan fleet sales reduced by 49.2% which is the consequence of the decision Nissan took to focus on quality of sales. To go more deeper, let's see where is The US business performance. As you can see, our retail sales in The United States are growing month on month and most important, following the quality of sales, our fleet mix in Q2 was down by 20 points.
On the other side, our rental volumes reduced by 90% with respect to the last quarter. We also focused on inventory optimization to focus on quality of sales but also to improve our cash flow and in United States, we reduced our inventory by 28% which is equivalent to twenty eight days. Again focusing on quality of sales, the incentives were reduced by 5% and the net revenue per unit was increased by 3% in line with our business mindset change from volume to value. Now when we look at the network power, this is a clear demonstration of dealer engagement and satisfaction. In February, we launched Nissan campaign focused on dealer financial health.
As a result, NADA survey demonstrates the increase of franchise value of Nissan by 40%. The dealer reputation score which shows the satisfaction of dealer with the customers Nissan became number one brand in United States to have the reputation score and as a consequence our dealers in United States average profitability increased by 2.2 points. After brand power, Nissan is starting to build up the foundation in United States and this can be only demonstrated at first by the customer recognition and the institution's recognition. Nissan products and services were recognized by various institutions and customers. Nissan received JD Power IQS Nissan received JD Power Vehicle Dependability Study, Nissan received JD Power Appeal Study and most important seven of our products are now Consumer Reports Recommended.
Now look at our two core models in United States. At first Centra, thanks to quality of sales, our residual value is higher than the market and as a consequence we are improving our net revenue per unit on this car. The second example is all new Rogue which we just launched and we have gained our residual value in line with the market and there is a tremendous positive acceptance by the market for all new Rogue. Now looking at China business performance. Following the market, Nissan is growing month on month with respect to last year since April.
However, during the pandemic and post pandemic, we did see incentives significantly increasing in the market. However, Nissan keeping the focus on quality of sales is growing profitably in China with the growing market share. China being one of the leader for case Nissan in terms of autonomous driving features which is the state of art technology ProPilot, we saw 8% penetration in China for our autonomous driving features. When it comes to connected, more than 2,000,000 cars in China are fully connected and we are going to expand the case application in China moving forward. Finally, our home market Japan.
Japan is categorized into two segments K Car and Registered Car. Thanks to the launch of all new K series, Nissan has significantly grown in the K segment specially fueled by all new RUX which has made a growth especially in September higher than last year. On the registered car, Nissan is facing the challenge because of the aged product lineup however, with the recent launch of Kick C Power and very soon launch of all new compact car, we are confident that we will gain profitable market share in Japan. In Japan, Nissan is recognized as a technology brand and Nissan wants to focus to build the state of the art technologies in Japan demonstrate to the customers and as a result on connected where Nissan has started generating revenue using connected services we have more than 6,000 subscribers. On the autonomous driving, Nissan is number one sales in the world's first hands of driving with a clear human centric approach when Nissan is applying ProPilot in the K car but also in the top of the line Skyline and today in Japan, 31% of our cars are fitted with hands off driving features.
The next one is shared. Nissan launched e mobility in Japan with more than 16,000 customers and most important 90% of the customers are willing to use it again. Nissan also used shared mobility during the pandemic to offer test drives to the potential customers. And after this success, Nissan is going to expand the shared services in Japan. And final, the most, Nissan being pioneer in battery EV, Nissan still remains the number one in battery EV in Japan.
On the other side, Nissan's unique technology of e power has reached 21% of penetration, which clearly demonstrates the customer recognition of Nissan technology as a technology brand in Japan. As a part of community service where Japan is prone to the natural disasters, Nissan is contributing to the community by providing the electric vehicles and we have signed 100 agreements with cities and the companies. To summarize where we are on Nissan NEXT which is our business transformation. If we talk about three main pillars, the first Quality of Sales. We reduced our rental mix, we reduced our incentives and finally we were able to increase our net car sales revenue by 1.5% In case of again quality of sales and focusing on free cash flow, our inventories globally reduced by 26%.
And most importantly, in Nissan NEXT, we announced that we are going to reduce our fixed cost by $300,000,000,000 In quarter two, we could reduce our fixed cost by 12% which clearly demonstrates that we are on track to achieve our fixed cost reduction in line with Nissan NEXT. When we look at the details in manufacturing, the decisions we took to close Indonesia plant, Barcelona plant and some of the lines around the world helped us in reducing the fixed cost and it is going to continue. In terms of product, we decided to exit some of the non profitable segments like the Vans segment in United States. In terms of marketing and sales, we also focused and prioritized our investments in the core segments and the core markets. And general and administrative expense also we reduced by 11%.
So with these three pillars, we are confident to be on track to achieve Nissan NEXT. As a result, if we look at our financial performance for the first half, our net revenue for the second quarter is R1.9 trillion dollars Our operating profit R4.8 billion dollars which is significantly better from quarter one thanks to the fixed cost reduction quality of sales. When we look at our non operating, we have positive 5.2% which includes profit and loss in companies under equity method including our Chinese operations. Our net income significantly improved from Q1 however it remains negative at negative 44,400,000,000.0 yen When we look at the transition with respect to the twenty nineteen quarter two, we have a significant reduction in the volumes because of the global market during the pandemic. However, thanks to the quality of sales and fixed cost reduction, we were able to mitigate a significant amount of drop because of the global markets and that's how we finished with minus 4,800,000,000.0 yen of operating profit in quarter two.
When we look at our free cash flow, our free cash flow for the quarter two is positive, plus JPY $311,000,000,000. However, the quarter one was negative and in total, our first half free cash flow is minus 504,600,000,000.0. But the most important thing is the net cash inflow from P and L items in second quarter was positive JPY 100,000,000.0 and this demonstrates that Nissan operations have started generating the net cash in the operations. Finally, coming to the liquidity status in short term and mid term and long term. We continue to strategically accumulate liquidity despite the difficult business environment from COVID-nineteen.
At the September 2020, cash and cash equivalents were over JPY 2,300,000,000,000.0 and net cash totaled JPY 505,800,000,000.0 for the Automotive segment. Furthermore, we still have unused committed credit facilities of approximately 2,000,000,000,000 yen as of September 2020. In response to COVID-nineteen, we raised $895,000,000,000 yen through financial institutions between April to September 2020. In September, we issued bonds to raise long term funding of approximately 100,000,000,000.0 yen As board insurance have longer tenure, we have enhanced our long term liquidity. In summary, operations of quarter two and the first half has demonstrated business operations recovery.
However, we are fully aware of the challenges in front of us and we will keep focusing on improving the operational efficiency, having a focus on people safety and the cash security. REPRESENTATIVE:]
Now I will turn to Uchida san to walk through the outlook for the remainder of FY 2020.
Yes,
thank you very much. Let me talk about the full year forecast for the fiscal year 2020. And the forecast for the TIV, looking at the full fiscal year, Nissan forecast global TIV to be 75,900,000 units, 11% down from the prior year. The full year guidance is slightly better than what we announced July. However, market outlook remains uncertain due to COVID-nineteen, and we will be keeping close watch over how global markets continue their recovery from the impact of the pandemic.
Based on the TIV assumption, Nissan's global retail volumes is expected to be 4,165,000 units, a decline of 15.5% from the previous year, which is 1% better than the previous projection, reflecting an initial market recovery. During the second half, Nissan will remain committed to not chase volume for the sake of volume and will continue to focus on better quality of sales. Given the current circumstances, Nissan revised its full year guidance as follows: Nissan is forecasting net revenue of JPY 7,900,000,000,000.0, reflecting the latest sales forecast that is 2.1% better than the initial expectation, excluding China. We foresee an operating loss of JPY $340,000,000,000, which is JPY 130,000,000,000 better than the previous projection, demonstrating the steady progress of Nissan NEXT. We expect a net loss of JPY $615,000,000,000, which is JPY 55,000,000,000 better than our previous estimate.
Compared to the previous guidance announced in July, the anticipated movements in profit drivers are as follows: An increase in raw material prices is forecasted to have a negative impact of JPY 11,000,000,000 mainly due to the cost of precious metals. On the other hand, higher sales volume is expected to produce a positive impact of JPY 29,000,000,000. Selling expenses are expected to have a positive impact of JPY 15,000,000,000 primarily due to the reduction in incentive spending per unit. Sales finance, monozukuri, fixed and other costs are expected to have a positive impact of JPY 97,000,000,000. This includes a release of loss provisions for sales finance as well as the additional impact of fixed cost reduction.
As we stated in May, we are aiming to reduce fixed costs by JPY 300,000,000,000 versus fiscal year twenty eighteen, and we are on track. This slide outlines operating profit variance analysis comparing the revised forecast with the prior year. Our sales volume is expected to reach the prior year level in the second half of the year but will not completely offset the decline we saw in the first six months, particularly during the first quarter. As a result, we are forecasting a negative impact of JPY396 billion from the volume related items. JPY 15,000,000,000 of positive impact comes from the reduction in selling expenses.
Monozukuri, fixed costs and other items continue to be major contributors to our profitability with a positive impact of JPY 136,500,000,000.0. This comprises our revised full year guidance. Overall, Nissan NEXT transformation plan is steadfastly progressing. As Ashwani showed, we are making good progress across our business operations with our plan across several key metrics. However, given the persistent uncertainties related to the pandemic and global economy, it is imperative to put even more focus on financial discipline and strengthening our sustainable business foundation.
Nissan is working intensively, particularly on the following key areas: We are reducing fixed cost without compromise to improve our cost base through tight inventory control and production capacity optimization. We continue normalizing sales in North America while pursuing better quality of sales worldwide. It is critical to sustain the momentum built in the second quarter towards the 2020. Rather than unthinkingly pursuing sales volume growth, we aim to achieve steady growth while ensuring profit per unit. To achieve this, we will introduce highly competitive new models in our core markets.
In The United States, last month, we launched our top selling Nissan model, the all new Nissan Rogue in the October. And the new Rogue has received a great reception from customers. We are also going to update our product offering in the SUV and pickup segments to drive our performance recovery in The United States. Within this calendar year, we will launch the long awaited all new compact car in Japan, our home market, along with the recently launched new Kicks ePa, where the significantly updated new compact car is expected to give a large boost to our presence in the market. In the other markets, Nissan is launching Nissan Magni compact SUV in India.
And we are also planning before the end of fiscal year to reveal the Infinity QX55 and latest models of the Cash Card, which continues to drive our sales in Europe. We expect these new models to support our bottom line between the 2020 and the 2021 going forward. All these demonstrates that Nissan will continue to update and enrich its lineup by launching new products. Though the business environment remains uncertain, we are steadfastly progressing our ongoing efforts that are focused on core markets, core products and core technologies to achieve a 2% operating margin in fiscal year twenty twenty one on a pro form a basis, which is one of the milestones defined in Nissan. Next.
I believe that the most important factor for our performance recovery is to restore the confidence of our customers, suppliers, dealers and all our stakeholders. To this end, Nissan is strengthening its business foundation together with our partners as we rediscover Nissan's DNA as an innovator and a challenger. We are undergoing a cultural transformation with a renewed Nissan way, a common value shared across Nissan globally and a corporate purpose that guides us on where we need to head. We will also continue to strengthen our relationships with suppliers and dealers and work with them to bolster our business model. I strongly believe that Nissan has to retain its Nissan Nest to be a credible company, a brand that you can always trust and count on.
I am committed to steering Nissan in the right direction to gain your trust back. As we outlined in Nissan A2Z, Nissan is demonstrating untiring efforts to innovate with the ARIA crossover EV. The recently revealed Z demonstrates Nissan's passion as a bold challenger. Nissan is committed to building models that embody Nissan ness in the new era. Let me close with one representation of this with our commercial on the all new Rogue, which went on sale late last month in The United States.
Mom, can we go to the beach?
Should we just go see a movie?
Yes. I'm always up for
a good movie. Thank
you for your kind attention. We would like to begin entertaining questions. If you have a question, please push the button, which is labeled raise hand. Please limit the number of the questions to two per person. Thank you for your kind understanding.
Let us start. Asahi Shinbun, Kamizawa san, UNIDENTIFIED We are going to switch over the camera to you, so please wait for a moment. Okay. Could you ask a question when you are on the screen?
Yes, go ahead. Yes, Asahi Shimbun Kamizawa is speaking now. The first question, between the first half and the second half, I would like to you to elaborate on this. In the first half, compared with the prior year, the volume is not growing as much as the competitors and the financial results are challenging. You are shifting from the expansion strategy and the results in first half for the year.
How do you assess the performance in the first half? For the second half, you made upward revision. But compared with the competitors, it seems like you are struggling because the growth looks stagnant compared with other carmakers. 2% operating margin in 2021. In order to pursue this, how do you see the projection going forward?
There's another thing. North America fleet is reduced by 20 points, you said. Last year, it used to be more than 30% of proportion. And the second question funding is my second question. Net cash is improving, but you are borrowing a lot of money from banks, so you have to pay a lot of interest rates.
And what is the burden of interest rates on the financials? What's your projection on this? Thank you. These are my questions. Yes.
Thank you for the questions, Mr. Tsujida san. With regards to the second question, CFO Mr. Ma will be answering, starting with the first question from me. First half of the year, what we presented today, in the second quarter, we are making a steadfast progress in better quality of sales.
Instead of pursuing excessive sales or without setting unrealistic sales goal or a stretched sales target, we are enhancing the quality of sales so that we can increase the revenue or profit per unit. So to this end, in the second quarter, the goals that we defined for Nissan NEXT, which was about better quality of sales, is reflected. We are seeing the results. That's how I assess the results for the first half of the year. And the question is how to continue this momentum of better quality of sales.
This is very important. For the second half of the year, the profit growth seems slow. That's what you said. But as I said, going forward, we are going to do some many new products. And from the second half of the year, Rogue in North America and the new compact car coming in Japan, We are going to be on the prog offensive, and we'll be spending investments going forward.
By making these investments, we are trying to attain this profit making in 2021. Of course, Nissan is still making losses, so we will continue tightening the control on fixed costs while we enhance the revenue per unit and attain two percent or a profit making in 2021 and the fleet proportion? With regards to this one, Ashwani san will answer this.
Thank you for this question. As you know that in U. S, fleet has got a different definition. You have three kinds of fleets. You have the rental fleet, you have the commercial fleet and you have the captive fleet.
So when we say that fleet mix went down by 20 points, this is the mix of the fleet. But when we look at only the rental fleet which is always making a damage on the profitability, that rental fleet went down significantly by 90%. So that's the difference between the fleet mix and the rental. Thank you.
Second question, Ma san.
Thank you, Commissioner Sao for the question. As you rightly point out, we have taken on additional funding this year. And as you know, during the pandemic, nobody can tell and predict the future. So there's a lot of uncertainty. We want to make sure that we have proper and ample liquidity.
So that's why we went out to get funding additional funding. And the additional funding allows us a lot more freedom or flexibility in handle and help us in the transformation of the company in line with the Nissan X. So we have restructured our debt and so in much more long term nature. So we have long term liquidity. The rates that we have is competitive to our credit rating and is if you look at what our competitors have raised in terms of U.
S. Dollar, euro bond in those markets, we actually are very competitive versus what they have raised during this time. And finally, we have also gained this long term funding to make sure that we diversify our funding source, so not we just don't rely on one single source or just banks for our funding requirements. So hope that answers your question. Of course, with this additional funding, we will get a little bit more interest costs.
And you will but given that global interest rate is lower, the net effect is not as much as it would have been in other cases. So thank you.
You.
For a little while. Thank you. You. Mukoyama from Yomiuri Shimbun. Can you hear my voice?
Yes. Thank you. Please go ahead. I have two questions, if I may. My first question a question to you, Uchida san.
Well, was an upward revision. What is the greater factor driving your upward revision this time around? And also, recently, in Europe, U. S. And Japan, there is the risk of further expansion or resurgence of COVID-nineteen pandemic.
So what is the business decision to conduct an upward revision in your guidance? My second question this is for Mr. Gupta. Question for Mr. Gupta.
You talked about U. S. Operations or Chinese operations in your presentation. When it comes to U. S.
And China, can you talk about the progress, if you will, of the Nissan NEXT program for each region, China, U. S. And in the major regions as well? Thank you very much. Let me respond to your first question about the reasons driving the upward revision.
At the July, we were observing TIV, but the TIV situation has recovered compared to the situation back in July. So that is why with this outlook, we decided to carry out this upward revision. Furthermore, for one thing, our sales financing the provision for bad loans the provision for sales finance is much lower than we had anticipated. We gave you the upper periphery OP variance analysis earlier, so those factors are factored in. And on top of that, we talked about Nissan next.
Ashuwani talked about Nissan next, and KPI is doing very well. We want to maintain this strong momentum for KPI and observe the pandemic situation. At the same time, we'll make efforts to lead to further growth. And based on that, we decided to announce the upward revision in our guidance this time around. But at the risk of repeating myself, we are still not making a profit at this juncture.
So that being the case, we want to make sure that we're able to produce as positive results as much as possible. We will not be complacent. Thank you.
Thank you for this question. So I would like to answer your question in a summary. What is Nissan NEXT? So Nissan NEXT is rationalization and sustainable growth. So at first, where we are on rationalization, rationalization means why we have to do it.
We have to align our organization, our capacity in line with 5,400,000 sales volume. To do that, we have to first exit from the product segments where we are not profitable. That's what we did with Datsun in some of the markets. We did with Vans in United States and also we did with some of the other segments. Second, as a consequence of exiting the non profitable product segments, we have to align our manufacturing capacities.
We closed Indonesia. We decided to close Barcelona. We decided to close the third line in Canton and many other things, decisions which we took in terms of manufacturing. So this is all about the rationalization. On the other side, in parallel with the rationalization, what we said in Nissan NEXT is we want to have a sustainable growth by sowing the seeds for the future.
How we are going to do that? Number one, the new products. We are going to launch 12 new products in the Nissan NEXT. This is what we explained just before and we are absolutely on track. Number two, core technology.
As we explained, we will focus on Nissan unique technology, which is e power autonomous driving on ProPilot. And number three on the core markets, which is China, U. S. And Japan. Now answering to your question, in United States, we are growing, but we want to focus on quality of sales.
And month on month, we are growing. But what's very important is how we are growing keeping the product power but also the network power which is the dealer engagement and the satisfaction. And we showed today that how it is improving. However, we have to go and we will keep our eye on the ball and move forward exactly with the same principle, which is quality of sales. Coming back to China, post pandemic, we have seen clearly the change in the customer behavior and that's where we are seeing that entry segment and the higher segments are growing.
And Nissan is aligning its business strategy in China. Even if we are growing higher than the last year, we want to maximize our brand as a technology brand. And as a result, we are going to launch ePower and we are already there with autonomous driving features like ProPilot. And this is what Chinese customers are looking for from the Japanese brand like Nissan. So putting in perspective, in all the core markets, we are growing profitably.
And on the other side, when it comes to rationalization, we are implementing everything which is needed to align with 5,400,000. Thank you.
Thank you. Next question.
UNIDENTIFIED
NHK Owe san, please. Owe san, go ahead. This is Owe of NHK. Thank you for the opportunity. The first question is about the production capacity or footprint in China.
This is a promising market. And are you I think trying to increase the capacity in Jiangyang and Wuhan. When are you going to increase the capacity? And how much are you going to increase the capacity? What is the maximum increase of the capacity that you are projecting for China?
And next one is about autonomous driving. The other day or yesterday, Honda announced about the Level three autonomous driving type homologation was obtained by Honda. Nissan has ProPilot equipped cars, which is 1,500,000 units. Well, at least that's your plan. So in the next stage, the Level three, what's your approach to Level three autonomous driving?
These are the two questions. Starting with the question in China. This is part of Nissan NEXT plan. Therefore, our production capacity will be optimized across the globe. But when it comes to promising like market like China, we have decided on this investment way back.
But because we are we are the markets are uncertain, production efficiency will be maintained. That's what we can say now. And for the breakdown or details, that's all we can say at this juncture, but at least this is our intention or plan. And the second question, we have we introduced PROPilot before anyone else, and ProPilot two point zero is available now. And Level three and Level four, this also includes the aspect of regulation.
First, what's important for us is to deliver value to the customers which the customers appreciate, and the ProPala two point zero should be updated based on the customers' benefit. So what will we call it, level three or level 2.5, we're not sure, but we are going to provide products that cater to the needs of the customers on a timely manner. That's our intention. Does that answer your question? I hope so.
Yes. Thank you. Yes. Moving on to the next question, Financial Times, Inagaki san.
Hello, my name is Connie Inagaki from Financial Times. Thanks for taking my question today. I just wanted to ask about, I mean, saw today some signs of recovery in The U. S. Market, But I was wondering if you can tell us, what kind of impact do you expect from the US election results, in terms of business environment and strategy.
Particularly, I mean, will it be a boost for Nissan's EV strategy considering President-elect Joe Biden's $2,000,000,000,000 plan to use green energy to revive The U. S. Economy? Thank you.
Thank you for the question. Well, naturally, in The United States, for more than thirty seven years, we have been running business in United States. And going forward, we will continue making investments in U. S. Operation and continuing our production efforts.
With regards to North America, we will continue working together as the team members. And as of today, this is how much I will comment as one specific company. That's all we can say as of now. Moving on to the next question, which is Hello. I have two questions.
The first question, in the second half of the year, what's the projection here? Between July and August, you see a sharp recovery in your profitability. According to your projection, you are going to generate about JPY 200,000,000,000 of operating loss. But are you too conservative? Or there's a possibility that your losses will increase in the second half of the year?
What's your projection for the profitability in the second half of the year? Next is about U. S. Market trend. Compared with the prior year, sales of Nissan is not recovering as fast as the competitors.
That's what I see. In October, you introduced Nissan Rogue, and you are containing the fleet sales, but the new car impact will be fully benefiting Nissan after October. When are you going to come back to the prior year? What's the timing? What's the tempo of the recovery that you are foreseeing?
Thank you for the question. Starting with the second question, New Rogue. We launched the New Rogue. And as we presented earlier, this is highly appreciated by the market going forward in United States, mainly around Nissan New Rogue and other new models will be coming. And this is related to the first question.
The profitability in second half looks low, you said, because we are launching new products going forward. So as we said, in many ways, we are spending more money such as ads. So these are the investments for future growth. So this new model impact will be benefiting us towards the end of Q4 or the first quarter of next year. So figure wise, you may feel that the full year guidance looks conservative.
And COVID-nineteen is what we are putting out close was, so we are being ready for this as well. So because of these two factors, we are announcing this full year guidance as it is. Compared with the first half of the year, you may think that the figures look conservative. But on the other hand, in the second quarter, we are delivering results that we promised in Nissan NEXT. And without compromise, we will implement Nissan NEXT, and this remains unchanged.
So we will keep control on fixed costs while we launch new models to increase the revenue of the new car sales. This is what we would like to focus on. Needless to say, based on the results of Q3, we want to work very hard as an with as a single team to deliver better results as possible. You. We are running out of time, so this will be the final question.
Mr. Godo Okazaki, please go ahead. Thank you. Good afternoon. Thank you very much.
I would like to ask two questions. My first question is this. My impression is that the situation is improving much more than we had initially expected. I'm very happy to hear this. So I also have some questions about the North American operations.
The recovery of your North American operations, you want to improve the quality, you're not going to go out of volume. But as far as the numbers are indicating, I think both volume and quality is improving for you. So that's quite an outstanding, amazing situation. A lot of companies want to do this, but are not able to do this. So why is it that you were able to improve the situation so strongly?
Did you do anything special? I would appreciate some pointers. And also the other point, Uchida san, you talked about the fact that your company is still generating a loss. And again, it's only inevitable that we talk about these numbers, but going forward, eventually, you'll be generating a profit. At that juncture, what type of manufacturer do you want to emerge at that at that time?
And also what type of value do you want to deliver to the public? And because of COVID-nineteen, I know you can't talk about the long term future, but based on that assumption, Uchirasu, please share with us what is in your mind and in your heart. These are my two questions. Thank you very much. Thank you for your question and also thank you for your high level of appreciation.
As far as North America is concerned, yes, we've been focused on improving quality even before Nissan X. This is something that we've been implementing since some time ago. So when we first implemented this, we shifted gears to improving the quality. And we were at that juncture, we did not have a strong coordination. So I think it was at the time of third quarter last year, when we explained about this program, the situation was very difficult for North America.
And I remember making that calculation last year. But now it seems that all the programs that we've been implementing since the past to improve the quality of sales are now coming into fruition and they're translating into strong numbers. And to continue this trend is very important for us. It's not just about North America, by the way. In other regions as well, it's important that we reflect on what has taken place in the past.
So we want to make sure that we continue with this program. And in other regions as well, we want to introduce the same thinking. Ashwani, can you talk about the North American trend, please?
I state five key success factors for our U. S. Business transformation recovery. Number one is the product lineup refreshment. We are going to launch six new models in United States in coming eighteen to twenty months with the latest technology including ProPilot.
That's the first key success factor. The second key success factor we have great products. We need dealer satisfaction and dealer engagement and this is what we explained that we launched the program focusing on dealer financial health in February 2020 and now we are getting full support and engagement from our dealers. That's number two. Number three is about our brand.
Because of the fleets, our brand positioning was really at the bottom and because of the quality of sales and some of the fundamentals we are doing in United States starting from IQS, starting from Consumer Report, we are getting into a stage when we are building our brand in United States. That's the third thing. The fourth thing is on the fixed cost reduction which comes from the Monozukuri. We took the decision to exit VAN segment in United States which helped us in reducing the fixed cost in Canton plant by closing the line number three And also we redistributed the allocation of the plants in Simrano. We have now two ships running for SUVs and Canton will make trucks.
So by this efficient allocation of the production we could reduce our cost. So that's the fourth thing. But the fifth thing which is very much important, we are changing the culture, the mindset from volume to value and to support that we established Nissan North American Board and we have now independent advisor Ms. Nelda Connors who is helping her who is helping us to change the culture in United States. So with these five key success factors we think that we are on trajectory.
Having said that, exactly as you said, retail sales month on month is increasing, and I think we have long way to go, but we are absolutely on the trajectory. Thank you.
UNIDENTIFIED Thank you. Then let me turn to your second point, if I may. Of course, for the time being, it's important that we will attempt to further solidify our financial base and also we need to translate our activities into growth. At the same time, what about where is Nissan going beyond that point? On this point as well, we're talking about post Nissan NEXT as well internally and we're also talking about where Nissan wants to be in 2030.
We're already having that discussion. And I'm sure that eventually, we'll be able to have a forum where we explain our thoughts to you. It's important that we project Nissan in a positive manner. I've always said that Nissan can do so much better. It's important that we translate the potential we have for into customer value.
So for the time being, we will implement Nissan next. We'll put Nissan back on track for recovery. And also at the same time, the value of Nissan needs to be delivered and provided to the customers so that we can enrich the lives of our customers. That is the objective that we have. So what is the goal that we're going to set?
Inclusive of that, we hope that there be an opportunity to explain our thoughts to you at a separate occasion. I'm looking forward to that opportunity. But for the time being, again, we will need to overcome this very difficult situation right now and make sure that we'll be able to restore confidence from the public and from all of you. And we will, of course, the management and the employees will come as one to work better. So we look forward to your continued trust.
Thank you very much for that. Well then, lastly, Mr. Chida would like to offer one final comment. Thank you for your questions. Today, we made an upward revision of our full year guidance.
However, as was repeatedly mentioned during the Q and A session, it is true that Nissan remains for now an unprofitable company, and we humbly accept this reality. The entire organization is working as one team to recover our performance and move Nissan forward. We will prove and deliver on the true potential of Nissan. Nissan Q and A is so much better. We ask for your ongoing support.
Thank you for your participation. Ladies and gentlemen, with this, we would like to conclude the presentation of fiscal year twenty twenty two financial results. Thank you for your participation.