Their operating profit came to 995 million yen (USD 6.4 million) for the quarter, according to earnings results announced. The automaker also revised its forecast for profit growth for the full year ending March, now projecting a 12 percent drop to 500 billion yen.

Net profit sank 73 percent on the year in April to June to 28.5 billion yen.

Increased inventory in the U.S. and softer-than-expected sales forced Nissan to spend more on sales incentives, CEO Makoto Uchida said.

The automaker’s stock price fell as much as 11 percent afterward.

Nissan’s woes stem in large part from headwinds in the U.S. market. Increased spending on sales incentives dented quarterly operating profit by 110.4 billion yen, more than wiping out the 23.7-billion-yen boost from a weak yen.

Nissan’s unit sales in the U.S. slumped 3 percent on the year in April to June to 230,000. In contrast, Toyota Motor’s sales grew 9 percent to 620,000, and Honda Motor’s by 3 percent to 350,000.

Nissan is dropping behind other leading Japanese automakers largely due to a failure to launch hybrid models in the U.S.

Hybrids have regained popularity in the market since 2023, as inflation dampens demand for more expensive electric vehicles. Toyota holds a roughly 60 percent global market share in the vehicles. Honda has also enjoyed strong sales of its CR-V hybrids.

Without a hybrid option in the key U.S. market, Nissan’s inventory days—how long it keeps inventory before selling it—stood at 55 as of July, compared with Toyota’s 27 and Honda’s 49.

The lack of hybrids also weighs on Nissan’s unit sales price, which is key to raising profits. The average transaction price for Nissan vehicles in the U.S. declined 4 percent over a year to USD 34,000 in June. Toyota, in contrast, saw a 5 percent increase to USD 41,000.

Nissan so far has focused more on EVs in the U.S., and will not be launching hybrid models there until at least 2026. A lower unit price combined with increased spending on incentives has dealt a heavy blow to its earnings.

For now, Nissan plans to launch several new gasoline-powered models, including of the popular Kicks (lead photo), in the U.S.

“The introduction of new and refreshed models will help boost sales volume” and earnings, Uchida said Thursday.

But uncertainties remain. Nissan originally projected global sales of 4 million vehicles in fiscal 2023, but downgraded the forecast over the course of the year to 3.44 million. It has already lowered its outlook for the current fiscal year by 50,000 to 3.65 million vehicles.