Nissan Motor Ltd S/Adr

Ladies and gentlemen, we would like to start the fiscal year 2021 first half of financial results of Nissan. Thank you very much for joining us in a great number. Thank you. COVID-19 pandemic is on the decrease, but from the point of view of preventing the further infection, we used the internet conference system as well as live streaming for this presentation meeting. First of all, we would like to introduce to you the participants on the podium. COO, Mr. Ashwani Gupta. And our CFO, Chief Financial Officer, Mr. Steven Ma. It is a great pleasure that we have this meeting. Mr. Gupta will make the presentation regarding first half of financial results as well as the annualized outlook. Mr. Gupta, the floor is yours.

Thank you, Hamaguchi-san. Hello, everyone. Thank you for joining our earnings session for the first half of fiscal year 2021. Let me first start by apologizing to our customers for the inconvenience caused by delayed deliveries due to the impact of the semiconductor shortage and the pandemic. We thank you for your patience and understanding. I would also like to pay tribute to Nissan's employees around the world who have worked through such a hugely challenging period while always keeping their focus on the customer. Their hard work and resilience positions us strongly in the face of ongoing challenges keep us focused on delivering value to customers and being well placed to emerge from this period as a stronger company in line with our Nissan Next transformation plan. Let me start with an overview of our business performance. As you may be aware, in the second quarter of fiscal year 2021, the whole automotive industry saw an ongoing adverse impact from continuing pandemic disruption. And the supply chain volatility dominated by the global semiconductor shortage. As a result, the total industrial volume declined 12% year on year. The impact we have felt at Nissan was in line with the global trend, with our overall quarter two retail volume declining by 10%. On the positive side, despite these challenging headwinds, Nissan delivered a strong performance in Q2 in our key markets of the United States, China and Japan, with our unit sales outperforming the average. However, we have felt the semiconductor impact most strongly in our European markets, where pandemic disruption has continued to distort demand, impacting our retail volume which has fallen 12 points below the market average. This is due to prioritization of product mix and market mix for the business community. Because of challenging external market environment, the reported unit sales performance was negatively impacted even if we outperform the industry as a whole in key markets. In Japan, we saw year-on-year sales decreased by 11.6% to 106,000 units, by 9.2% in China to 354,000 units, and by 8.6% in North America to 274,000 units. In the most challenging environment, Europe saw a year-on-year decline of 31.3% to 81,000 units. Our remaining markets saw a stronger Overall year-on-year performance, growing sales by 8.6% to 139,000. I am pleased to report that our newly launched models have been well received by our customers. For instance, the Aura in Japan has received 21,000 orders year-to-date through to October, and the Qashqai in Europe has received 58,000 orders over the same period. In United States, our new Pathfinder and Frontier products, both of which started sales this summer, are helping us to grow market share. The Pathfinder segment share has grown to 4.7% and increase of 1.7 points. The Frontier share is now at 9.9%, a leap of 5.3 points. Models launched earlier during the Nissan Next transformation plan have also showed continuous positive momentum after being well received by our customers. In quarter two, the note and the kicks in Japan performed well with the note growing market share by 2.9 points and the kicks by 3.6 points. Similar growth was seen in the United States with the Rogue and the Sentra. The Rogue grew share by 2.3 points and Sentra by 1.8 points. In China, our Silphi grew at an impressive 4.5 points over the quarter, and in India, the Magnite at 4.4 points. These trends show how our products are being well-received by more customers, and that momentum is building in the business. This momentum is founded on our products capturing customer needs market by market. Our commitment to invest in enhancing our products, technologies and manufacturing facilities has continued strongly through the quarter. The new Nissan Z was unveiled in August in United States paying tribute to the original Z through its iconic styling. The new Z continues our legacy in sports segment. As we drive forward with our focus on electrification, we are bringing to the market the new K-EV, an all-new electric mini-vehicle scheduled to be launched in early FY 2022. Again, Nissan is the first to enter K-segment which occupies 40% of the total Japan market with a battery electric vehicle and most important state-of-art driver assistance technologies like ProPILOT. We have also accelerated the rollout of our e-power technology in China. With our joint venture partners, Dongfeng Motors, we will begin e-power offerings in our products, starting with the Silphy. As we continue our product momentum, we are simultaneously making our factories greener and smarter. We announced our first EV360 hub in the UK. representing an investment of up to £1 billion in a unique electric vehicle manufacturing ecosystem. Last month, we have introduced our first Nissan Intelligent Factory at our Tochigi plant, a smart factory which will manufacture next-generation vehicles using innovative technologies. All with the aim of supporting our commitment to carbon neutrality. The first half of the current year also endorses our focus on customer excellence and demonstrates strong acceptance of our products. The human-centric innovations we pursue to enrich people's lives are definitely resonating with our customers, be it electric technologies like e-power or e-force or driver assistance technologies like ProPilot. On top of it, It is gratifying to see appreciation for our products and services by prestigious third-party organizations. In quarter two, approximately 20% of our sales were driven through digital platform for the sales conversion, providing seamless customer journey with an increase of six points than quarter one. We have expanded this digital online sales initiative to more markets and we are glad to see good customer receptivity. Dealer engagement is an additional priority for us, with good products and strong collaboration helping to motivate our key sales partners. It is evident that the combination of customer experience driven by great products and technologies and the efficiency of customer touchpoint managed with strong dealer collaboration have profound influence on our growing brand power. In Nissan Next, we made a strong commitment to change our business culture, prioritizing value over volume with a focus on profitability rather than maximizing volumes. And you can see the definitive progress here. Net revenue per unit is on a very positive trajectory year on year, growing 11%. thanks to higher grade sales, residual value improvements and disciplined price management. These have led to higher revenues. As a result, we have further reduced our breakeven point by 15% year-on-year while enhancing our investments in products and technologies for sustained growth. Now, turning to the financial performance for the first half, we delivered stronger than anticipated results despite the challenging environment. This slide shows our key financial performance KPIs on both the China joint venture proportionate basis and equity basis. On an equity basis, which is without our China joint venture operations, our operating profit for the first half was 139.1 billion yen with an operating margin Net income for the first half was 168.6 billion yen. Free cash flow for the automotive business was a negative 349 billion yen due to working capital usage as a result of low production resulting from semiconductor supply shortage. The net cash for the automotive business was 552.3 billion yen. On a proportionate basis, which is with our China operations, our operating profit for the first half reached 199.7 billion yen with an operating margin of 4.3%. This is well above our Nissan Next operating margin milestone of 2% for this fiscal year. The net cash for the automotive business was 949.8 billion yen. We continue to maintain strong levels of liquidity. Our cash and cash equivalents for the automotive business was approximately 1.4 trillion yen on an equity basis. We also have approximately 1.8 trillion yen of unused committed credit lines. Turning now to the operating profit variance analysis, this slide shows the variance from last year's operating loss to this year's operating profit. Foreign exchange had a positive impact primarily due to strong US dollar and Canadian dollar. The increase in raw material prices had a negative impact of 39.8 billion yen. The main drivers for the year-on-year improvement in profitability were due to our continued efforts to improve sales performance and monosuccurring. The sales performance had a positive impact of 263 billion yen. A significant portion of this came from higher grade sales, residual value improvements and disciplined price management, which is a result of our initiatives to improve quality of sales as well as tight market environment due to semiconductor supply shortages. Monozukari performance had a positive impact primarily due improvement in operational efficiency. Other items had a positive impact of 10.6 billion yen. Next is the income statement for the first half on an equity basis. Net revenue improved by 854.3 billion yen from the previous year to 3.9 trillion yen, which is 27.6% above than previous year. Operating profit increased by 297.9 billion yen to 139.1 billion yen representing an operating margin of 3.5% which is 8.6 points above than previous year. Net income increased from the previous year by 498.6 billion yen to 168.6 billion yen due to the improvement in the operating profit. As well as positive non-operating income resulting from the significant positive contribution from equity method companies and extraordinary income which included the gain on our scale of Daimler shares in quarter one of this fiscal year. In addition to the improvement shown In the first half, on an year-on-year basis, the columns on the right show the progress we made in Q2 year-on-year. Turning now to our outlook for the remainder of fiscal year 2021. Based on our H1 performance, despite the challenges of supply chain, we are revising our outlook from 150 billion yen announced in July 2021 to 180 billion yen. Due to the change in the foreign exchange assumptions, which reflect the recent devaluation of yen, we are forecasting an additional improvement in foreign exchange regulatory and product enrichment costs. In addition to the Forex, one of the main reasons for the upward revision is our continued focus on sales performance. While the semiconductor shortage continues to be a challenge for the automotive industry, we anticipate that our sales performance efforts, including our quality of sales initiatives and sales finance business, will more than offset the reduction in the sales volume resulting from these challenges. As a result, we are forecasting an improvement of 20 billion yen in our performance. Investment In new vehicles remains unchanged as we pursue future growth. We are also maintaining our assumptions for the increase in the raw material prices. We see the semiconductor shortage impact to the automotive industry has been larger than anticipated. Quarter 2 global market was down by 12%. Most recently, September was down by 19%. and October was down by 17% year-on-year. Specifically, in the United States, Japanese OEMs were down 23% in September and 28% down in October. We anticipate November to start recovering, but we see the operating environment to remain volatile in the second half. Given these uncertainties, it is difficult to refocus the global market At Nissan, we are revising down the FY21 global sales volume outlook conservatively from 4.4 million units to 3.8 million units. For the full-year financial outlook, we are revising our profit forecast upwards. In line with our sales volume decrease, the net revenue is expected to be down by 950 billion yen to 8.8 trillion yen. However, the decreased rate for the net revenue is smaller than the sales volume, which demonstrates the improvement in quality of sales. We are revising upward our outlook for the operating profit by 30 billion yen to 180 billion yen. This equates to operating profit margin of 2% based on equity basis. Including our China JV operations, this amounts to 280 billion yen a 2.8% operating profit margin. This is primarily due to better than expected results for the first half, in particular on the improvement of quality of sales and sales finance performance. We revised our net income guidance upward by 120 billion yen to 180 billion yen, primarily due to the contribution of our better operating profit performance and also better profit contribution from partner companies under equity method as well. In summary, despite volume reduction, the decrease in net revenue is less than the rate of volume reduction. This means our shift from volume to value is translating into improvement in operating profit and net income. With the upward revision of operating profit margin at 2.8% based on proportionate basis with China, we are confident to exceed the Nissan Next milestone of 2% operating margin this fiscal year. With this, we will continue to be on track to deliver our goal of 5% operating profit margin in fiscal year 2023. In conclusion, let me reaffirm that commitment to sustainable growth. With Nissan Next, we committed to making a significant strategic shift in our business and build a durable foundation. We pursued sustainable growth by rationalizing our business, putting priorities on core markets and core products, delivering a continuous stream of innovative products while being meticulous in our financial management and ensuring the a shift in mindset to deliver value over value. As I said during the last quarter, we move forward with cautious optimism, embracing disruption, prioritizing products in demand, and maximizing our operations efficiency. Time is right for us now to bridge from where we are today to where we want to go. We will announce our long-term vision on November 29 and inform you of our strategic priorities and how these will develop beyond the Nissan Next timeline. As a company driven by our purpose of driving innovation to enrich people's life, we set an ambition to empower mobility and beyond, and we will do this together with our employees, our partners, and the wider society. On behalf of Nissan, I invite you all to join us as we embark on the next phase of our transformation journey. Thank you.

Okay, thank you. We would like to move on to the Q&A session. If you have a question, please raise hand function on the Zoom screen. We will call you, and if you are called, Please unmute your microphone, put on your camera so that if you see your face on the screen, please start your question. Your visual or your face will be shown on the people who are joining the session from the digital meeting system. Please limit the number of questions to two per person. Thank you. Please start your question. Nihon Keizai Shinbun, Asayama-san, please go ahead with your question. This is Asayama from the Nikkei Shinbun. Thank you for this opportunity. First, the folio guidance, what are the assumptions here? Net income of 120 billion yen. This 120 billion was improved for net income, whereas sales volume declined by 600,000 units. But the revenue... revised downward but net income why are you making such a big improvement in net income what are the positive factors behind this better net income regional sales volume forecasts are not shown here so could you give us including the regional breakdown could you give us the numbers behind this and as an assumption this production how How do you foresee the production going forward? Because semiconductor supply, COVID-19, in summer, I'm sure you are hit by these factors. But in the second half of the year, is it possible to recover your production? And how do you foresee the risk for the rest of the year? And how long will this risk last? These are the two questions. Thank you.

Thank you Asayama-san for this question. I think we can come to the slide 11 and I think that is very important slide to answer to your question. Why we are forecasting the profit upwards? Simple reason on this slide as you can imagine that is the sales performance. The sales performance comes from United States The sales performance comes from Japan. The sales performance comes from the other regions. Now, what is all included in the sales performance of plus 263 billion yen is, number one, our pricing power based on the value content which we have launched in the cars like Sentra, Rogue, Pathfinder, and now the Frontier. The second is the lower incentives which is, of course, coming by our sales discipline, but also coming from the market. The third part of the sales finance is about, sales performance is about sales finance, which is because of the lower credit losses, because now, in United States, the customers are keeping cars for long. And then, it comes to more our monozukuri performance, which is, of course, driven by the strict cost discipline and the fixed cost, which we have achieved. And as we explained before, we have reduced our break-even point. So if we extrapolate what all we have achieved in the first half, then please come to the slide 14. That explains that we are not changing The investment which we said in the start of the year which is 150 billion impact on our full year profit. We are also not changing our forecast for the raw material increase impact which is 185 billion yen. However, seeing what we have done in the first half, we are confident on the performance of 20 billion yen coming from the sales finance for the reasons which we explained earlier. for the first half. Now your next question is, what will be the impact of the semiconductor? So first half, we did the retail of 2 million. The second half, we think we will do a retail of 1.8 million. However, in the first half, we had the inventories. But in the second half, we will increase our production and we will increase our retail sales. That's why, as I said in my conclusion, that we are taking a very cautious, optimistic approach to forecast the second half. On one side, we are keeping our raw material increase, we are keeping our investments, but we are reducing our retail sales by 13%. How much confident we are on this retail number is, as I explained before, when we see the September global market, October global market, especially the Japanese OEMs in the United States, we clearly see the global market going down. Whether it is going to continue, I don't think so. Whether it will be improving, I don't think so. And I think this will continue. What we have to do is to improve day by day and keep a very conservative approach and keep our sales discipline and the cost discipline moving forward. Hope it answers your question, Asayama-san. Thank you.

Yes, I understand. But operating profit is 30 billion yen better But the net income, what is this remaining 90 billion yen? What is the factor that is adding this 90 billion yen on the net income? I'm talking about the net income. Why are we making such a big improvement in net income and the full year guidance?

As you might remember, in Q1, we sold our stake in the diamond share and we had a gain of 76 billion. That's below OP. On top of that, as you might have heard in our affiliate company announcement, our equanimity company's performance also improved. So we reflected our share of their profit improvement also below operating profit. Those are the two main contributing factors to widen the income so good.

Okay, understood. Thank you. Okay, moving on to the next question. NHK, Taruno-san. Taruno-san of NHK, please go ahead with your question.

NHK.

NHK, Taruno is speaking. Can you hear me? Yes, we do. Okay, starting with the first question, production reduction. What is the impact of the decline in production? Sales volume, full year guidance. was revised downward by 600,000 units. I understand this. But in first quarter announcement, you said in the full year, 250,000 units of production reduction will take place. And 250,000 units of production reduction, how does it change now? And this forecast of production reduction, how will it change over time? Could you elaborate on this reduction of production? This is my first question. And the second question. At the end, you were mentioning about long-term vision, which will be announced. That's what you said towards the end of your presentation. This long-term vision, is this a long-term business plan following Nissan Next or electrification strategy? Is it something like a strategy? What is this long-term vision about? These are the two questions. Thank you.

Thank you. Thank you for your question. What we have announced today is the retail sales from 4.4 to 3.8 million. Now when it comes to the production, region by region, the way we convert our production into the wholesale and into the retail is different. For example, in United States, it's more sell from the stock, whereas in Japan, it's more order to build. So that's why it's very important to understand what is the magnitude we are talking about? So the magnitude based on which we have assumed this 3.8 million is when we started the year, everybody thought that post-pandemic, the global market will be around 86 million. Now, after seeing the wave one of semiconductor impact, wave two of the semiconductor impact, and now we all are going through the wave three of the semiconductor impact, we estimate that the global market will be between 75 to 76 million, which is roughly 12 to 13% down with the original assumption of the global automotive market. So if you look at that, we are almost in line with the 12 to 13% of the retail volume down. However, what we are making sure that the drop in the retail volume should not be translated 100% into the net revenue, and that's why our net revenue is only 9% down, and we are completely compensating the impact of the volume down by the operating profit by adding the sales discipline but also the cost discipline. So this is how we have made our assumption, and as we move forward, obviously the semiconductor situation becomes more visible, and we will be able to share exactly our production plan country by country and region by region. Regarding your second question, thank you for this question. I think this is something which we were asked in almost all the announcements that Nissan Next is clearly understood, but what after the Nissan Next? And the long-term vision, as I shared before, is not really the mid-term plan. The long-term vision is what we want to be and where we want to be. is what about the long-term vision. We will talk about the strategic priorities in this long-term vision. We will talk about in line with what we announced is the carbon neutrality. We'll talk about the sustainability. We'll talk about what we announced that by 2030, all of our Nissan products will have the electrification offerings. So with the focus on strategic priorities, including the electrification, we will talk about in this long-term vision on November 29th. Thank you so much. Hope it answers your question.

Okay. Yes, thank you. Moving on to next question. Automotive News. Hans, please go ahead.

Yes, may I speak in English, please? I'd like to ask about the chips, the microchip shortage, and what the impact or the benefit of the Renault-Nissan purchasing organization has been in allowing you to deal with the chip shortage. Can you give us any concrete examples about how RNPO confers any advantage to Nissan or Renault in dealing with the chip shortage and what the how the alliance is actually better well positioned for this. The second question would be about the U.S. market. How do you imagine the U.S. market developing after we clear this chip shortage? With the pent-up demand, and do you see that there is going to be a sudden burst of activity in the market? What will be the effect on incentives? Will the incentives certainly spike as companies – compete to grab a bigger share of that rapidly market? How do you see the U.S. landscape developing after we clear this unusual period? That's all.

Thank you. Thank you, Hans. I think for the semiconductor, I think we may have many more questions, so please allow me to share with everyone. the big picture of semiconductor. Why it happened? I would say there are two categories. The first category is the production losses during the COVID lockdown. And the second is the capacity constraints due to the sudden increase in demand, not only by automotive, but also by the non-automotive. Now, in case of automotive, why we think that demand was suddenly increased? is, of course, post-pandemic, but most important, all the new technologies we are putting in the cars because of regulatory, but also the change in the customer behavior in terms of connectivity, in terms of driver assist technologies, and so on and so on. Now, both of these categories led to capacity constraints. So the wave one was the capacity constraint at a very high level and an unfortunate incident which happened in Japan with one of the semiconductor plant. Then the wave two came, which was more about the Southeast Asia pandemic lockdown. It is improving, but the impact has not been fully recovered. And after wave one, wave two, now we are going through the wave three, where the capacity constraints are evolving, mainly driven again by the sudden increase in the demand of non-automotive and the automotive. That's why even if we see the improvement, but we think that this is going to continue. So what we are doing and we should do is to prepare ourselves. How we can prepare ourselves? We have to predict how much predict we can do, how much prediction we can do. I think nobody has the crystal ball, but we can use different simulation to do the prediction. As I said before, 86 million becomes 76 million, then what happens next year? Now I would like to answer the question of alliance. Now I have talked about why it happened and where are we, but the most important thing is how we predict and how we prepare ourselves. And here, so far, our supply chain was fully dependent on a forecast driven by the automotive industry. But as I said before, the problem didn't even happen because of automotive. It happened because of non-automotive also. So now in our supply chain tool, how we can include the forecast of automotive and non-automotive. That's the first thing which we are doing with with Renault Nissan and Mitsubishi. The second thing is so far we were limiting our supply chain with the traceability and the control of till Tier 1 and Tier 2. Now, the question is the dependency on the Tier N, which means the wafer supplier is so much that how we can be connected till the last point of the supply chain. I think these are the two things which as Alliance Purchasing, we have started and we will be doing it. The last point, Hans, is we should also take this crisis as an opportunity to re-look into the way we do business, the way we produce the cars, the way we sell the cars. When we were in a good situation, we used to make a production plan based on three months and six months. But now we make production plan on weekly basis, even keeping the adjusting time. At the end, what we have achieved? We have achieved a better operational efficiency in production as well as in the sales. So to summarize, I think this will continue. Only thing what we can do is predict, prepare and improve day by day. Your next question is on the United States and thank you Hans. I think you are following Nissan on the United States business transformation plan and again repeat what I said in the financial announcement I think two years before that what are the five things we are going to fix in United States. The first we said that product. Since then, we have launched Centra, Rogue, Frontier, Pathfinder, and I think within one year, 70% of our product lineup in the United States will be renewed. Second, we talked about our brand power. Brand power driven by not only product, but also all our customer touchpoints. And as I shared before, this is going in the right direction. The third we said, that dealer collaboration, engagement, and confidence. And we have seen all the strong engagement from our dealers. Fourth, we said about our fixed cost, which is monozukuri. And with the reallocation of our production footprint, we have achieved it. And fifth, we said about the quality of sales discipline by establishing an independent board in the NNA with the independent advisor. These all five things have given us the success where we are today in the United States. Now, moving forward, what is very important is what this crisis has taught us is resilience and agility. We should not expect that this crisis will over and the new crisis will not be there. Something new will happen. And in the United States, exactly, once the supply is there, definitely everybody will go to come back to the market share, to capitalize all the capacity everybody has got in the United States. So we should be preparing it. We should be predicting it and preparing it. And I think Nissan, we will keep our foundation of quality of discipline, but we will be very flexible in adjusting to the market with an objective that we are focusing on the value which is driven by the profitability. It was a long answer, but I hope, Hans, it answers your question. Thank you.

Thank you very much. Now, next question.

Toyo Keizai, Yokoyama-san, please go ahead. Yokoyama-san of Toyo Keizai. Yes, I am Yokoyama. Do you hear me? Yes, we do. Okay, thank you for the opportunity. I have two questions. The first question, this is in relation to North America. Let me confirm about the incentive in the market. According to the research data for this fiscal term in October, incentive seems to be declining. And do you have an impression the incentive is too low or because of better product, incentives are lower? How do you elaborate or assess this level of incentive today? And talking about North America, investment in battery. In 2030, you are going to increase the ratio of EV of sales to 40% or so. And today, last year, you are only at 1% when it comes to EV ratio. EV, how are you going to penetrate the market's EV? How are you going to procure batteries? On 29th of November, you are going to talk about long-term strategy, but could you elaborate on the approach or philosophy behind this? Thank you.

Thank you. Thank you for this question. I think on the United States question, I tried to answer some of it to the Hans in the previous question. But again, I would like to emphasize the fact that the incentives are driven. I mean, let me put it another way. When we change our culture from volume to value, we also change the incentive from objective to consequence. So what we are seeing today is incentives are the consequence of what? It's the consequence of our product power driven by the value content. It's driven by our strict sales discipline on quality of sales. It's driven by our dealers engagement and confidence. So all these factors are helping us in lowering down the incentives. Now the question is whether this is the right level or not. I think we have to wait a little bit because Some of the impact is obviously coming from the market practice which exists today because of the supply-demand gap, but some of the impact is, of course, coming by our own performance. And as we move forward, definitely we will make sure that all what we have established as a part of our culture in the United States, we keep it, but we will have the agility to adapt to the changing environment. That's what we want to do in the United States moving forward. On the electrification, thank you for this question. As you know that Nissan has been pioneer to launch the first electric car, mass production electric car LEAF in 2011. At that time, customer didn't ask for it, market didn't ask for it, but we did it. Why we did it? Because we wanted to demonstrate our innovation in the market. So why I'm trying to say that is battery is very important for Nissan because for us, battery is the integral part of the electric car. And when we will talk about long-term vision on 29th of November, definitely we'll talk about electrification. Definitely we will talk about battery as part of our strategy. That's what I can share with you today. Of course, we have strategic partners, exactly as you said. We have strategic partners in China. We have strategic partners in Japan. We have strategic partners in United Kingdom. And moving forward, how we are going to expand our strategic partner base in United States, that will be the question which we will be sharing with you on 29th of November. Thank you for your patience till 29th of November.

Okay, thank you very much. Okay, there are people who are raising hands. but it's already close to the time, so this will be the final question. We are running out of time. Wall Street Journal. Sean, please go ahead with your question.

Thanks for my busy time. Ashwani and Stephen, I'm hoping you guys can help me out understanding your break-even number and how it's changing. I noticed that you're projecting... Sales volume was 3.8 million, but I thought your break-even was 4.4, I guess, or with the further reduction would be about 4.2. So maybe I'm just misunderstanding the numbers there, and you could walk me through that. And then secondly, just to follow on Hans' question, I mean, are you happy with your market share currently when sales eventually rebound and we get past the semiconductor risk shortages? A lot of people are aiming to amp up their production. There's a lot of idle factory space and a lot of cars waiting to hit the market and a lot of car buyers who don't want to pay so much money for cars. I mean, are you guys going to jump in and chase your sales volume as well, or are you happy with your market share fluttering around 5% right now? And by way of color, if you have any thoughts on the fact that Hyundai and Kia seem to be very close to your market position these days, are you sort of happy or do you even care that that's happening?

I think I will answer the second question, then I will request Stephen to answer the question on the breakeven point. To answer your question, whether we are happy with our market share, I don't think so. On the other side, whether we can do better, yes, we can do better. How we can do better is two years before, we had a problem how to sell. But that's not a problem today. we have a good problem to solve is customers are waiting and the problem for us is how much we can produce, which means the more we produce, more we sell and more market share we will gain. So that's the purpose what we have. Now, when I said, are we satisfied with our sales performance? Of course, yes. As you would have seen all the models which we have launched in Nissan Next, and also in this year, we have gained our market share, product by product. Now, moving forward, what we are looking at are only two things. Number one, how we convert our product power to brand power, and we have clearly started seeing our brand power moving in the right direction. That's why we are able to enjoy the pricing power in all the regions which where we have launched the products. The second is how we are going to gain the market share, and this is only possible with a strong involvement, engagement, and confidence of our dealer who are managing our customer touchpoints. So with these two, we would like to increase our market share, but once again, we will not like to increase the market share at the cost of volume. We would like to increase our market share at value. So maybe, Stephen, you would like to answer a question on the given question.

Thank you, Sean. So I think you're asking why with the 3.8 million units and we can make 180 and the 15%. You're absolutely right, Sean. If you take just the straight numbers, the break-even point probability reduced more than 20%. What we're showing here, 15%, is more on a real sustainable basis, meaning we normalized and took out all the one-off good news that we had in the first half. That market, like lost provision releases or used car value, those don't want to take credit for as our performance. We just said, okay, you strip those out. What is our real underlying performance? And based on that volume, what is the breaking point? That's how we came up with the 15%.

Can I understand that the break-even point is like right around 4.2? If I did some back-to-the-net math here, I'm just trying to figure it out.

If you take what we said earlier, 4.4 million and take 15%, that's about 3.7 million, yeah? And right now, roughly, that's the number. If we take out all the one-off good news, of course, we have potentially more raw material and fixed costs going forward. We will aim to keep our cost base as low as possible to maintain this level.

Okay, thank you, gentlemen. With this, we would like to conclude the financial announcement for the first half of fiscal year 2021. Thank you for joining the session, and good night. Ladies and gentlemen, thank you for joining us for the announcement of the 2021 first quarter earnings of Nissan Motor Company. We are very pleased to have so many of you joining today's session. Based on the latest COVID-19 situation, we are organizing this conference through live streaming. Please allow me to now introduce you to the executives who are in attendance today. Chief Executive Officer, Makoto Uchida chief operating officer Ashwani Gupta and chief financial officer Stephen Ma thank you very much in addition we also have several executives in charge of operations that who are joining the session We will begin with our CEO Gupta-san who will present the first quarter results followed by CEO Uchida-san who will walk through the full year forecast. Gupta-san, the floor is yours.

Thank you, Hamaguchi-san. Hello, everyone. Thank you for joining our first quarter earnings session. Before I begin, let me take a moment to express my gratitude to all Nissan stakeholders for their strong support to us during this tough period. As we look forward to the reopening of the world, I urge you to continue to take extreme precautions to avoid infections and ensure healthy living. Nissan had a good start this year with strong results driven by efficient business and financial management and decisive actions to adapt to the changing environment. This is a full team effort with every function and individual contributing their best. I especially want to recognize the efforts of manufacturing and supply chain teams for efficiently managing semiconductor shortage. Let me now provide highlights of our performance. In the first three months of the fiscal year, our unit sales increased sharply as the industry rebounded from the pandemic disruption of 2020. Both industry volumes and global Nissan retail sales increased by more than 60% keeping pace with the industry volumes. Our digitally influenced sales have further increased in Q1. This is largely attributable to the online inventory search which allows for ease of shopping before customers visit dealers given the uncertain supply situation. This is a resilient and encouraging sales performance after the volatility of last year. For starters, we have seen great product momentum and our unit sales improved across all markets. In the United States, the Nissan achieved strong sales for new models which lifted retail volumes by 68% and North America sales including Canada and Mexico by 70% to 378,000 units. In our home market of Japan, we are up by 7% to 90,000 units. While our K deliveries were impacted with supply chain constraints, this was offset by strong performance of registration cars, such as all new not. In China, where we see strong market recovery, unit sales were up 71% to 352,000 vehicles, reflecting our robust positioning as a technology brand. In Europe, Unit sales were up 69% as markets began to recover from the closure of retail networks in the first quarter of last year with 91,000 units sold. And other markets were up almost 80% accounting for