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Nissan slashes profit forecast as Ghosn arrest hurts brand appeal

TOKYO — Nissan cut its profit forecast for the fiscal year through March on Wednesday to reflect slowing sales, higher costs and the fallout from a criminal investigation of its former chairman, Carlos Ghosn. Nissan Motor Co. expects to post a 319 billion yen ($2.9 billion) profit for the fiscal year, marking a 22% drop from its earlier 410 billion yen ($3.7 billion) forecast. Nissan said the downgrade reflects higher costs in the U.S. from a warranty extension campaign for some vehicles and falling sales due to "corporate issues," alluding to the Ghosn scandal. Ghosn was arrested in November and is facing charges of underreporting his income and breach of trust. He says he is innocent. He was released on bail in March and is awaiting another court decision on bail after his re-arrest on April 4. Nissan, which is allied with Renault SA of France, has seen sales lag in France and Japan, where Ghosn is widely known. In the U.S. and China, buyers aren't as affected by the scandal, but the markets there overall have slowed. Other factors contributed to the revision, such as production not keeping up with demand for the Note, an extremely popular model in Japan. But the high-profile scandal has weakened the brand appeal of the maker of the Leaf electric car, Infiniti luxury model and X-trail sports utility vehicle. Nissan said it expects to sell 5.5 million vehicles in this fiscal year. Earlier it predicted it would sell 5.6 million. The company sold nearly 5.8 million vehicles in the fiscal year that ended in March 2018. The automaker reduced its sales outlook by 0.2% for the fiscal year through March 2019 to 11.5 trillion yen ($103 billion), compared to its previous forecast. It was Nissan's second downgrade for its outlook following one in February that cited faltering sales in China and the U.S. At that time, Nissan also logged costs about 9.2 billion yen ($83 million) related to the alleged underreporting of Ghosn's compensation. Nissan has promised to strengthen its corporate governance to prevent a recurrence of what it says is serious wrongdoing by Ghosn. Ghosn was sent by Nissan's French alliance partner, Renault SA, to help turn the Japanese automaker around when it was near bankruptcy 20 years ago. The future of the alliance is one of many questions clouding Nissan's future following Ghosn's ouster since he was the main liaison for the alliance, which includes smaller Japanese automaker Mitsubishi Motors.

Carlos Ghosn's new lawyer, 'the Razor,' starts slashing

TOKYO — Carlos Ghosn's new lawyer took aim at Nissan, prosecutors and courts on Wednesday, dismissing the charges against the ousted chairman as an internal company matter and saying Japan was out of step with international norms by keeping his client in jail. "This should have been dealt with as an internal matter," Junichiro Hironaka, nicknamed the Razor, said at his first press briefing. Ghosn, who was arrested in November over alleged financial misconduct and remains in detention in a Tokyo jail, picked a new team last week with long-time defense attorney Hironaka as a key member to replace Motonari Otsuru, a lawyer who once ran the prosecutor's office investigating him. Hironaka's combative style contrasts with the low-key approach adopted by media-shy Otsuru. Ghosn's switch to an aggressive legal strategy came after his attempts to win bail failed and just before lawyers were due to sit down with prosecutors and judges for the first time to hash out a schedule for pre-trial discovery meetings, where prosecutors will reveal evidence and submit a list of witnesses. Hironaka said he didn't know why Ghosn picked him, but added that Ghosn probably wanted an experienced criminal lawyer as the case moved toward trial. The 73-year-old defense attorney is reputed for winning high profile cases, including the acquittal of a senior lawmaker, Ichiro Ozawa, on financial misconduct charges. He also helped free a senior bureaucrat Atsuko Muraki who was jailed for four months on corruption charges fabricated by prosecutors. Yet, even with greater legal firepower the former Nissan Motor Co boss faces a criminal justice system where only three out of every 100 defendants pleading not guilty are acquitted. Neither does Japan have a plea-deal mechanism that would allow Ghosn to agree to lesser charges for a lighter sentence. "The change in lawyers means a change in style, but the legal strategy will still be the same. I don't think it increases Ghosn's chance of an acquittal," said Masashi Akita, a defense lawyer at Shin-Yu Law Office in Osaka, ahead of Wednesday's comments by Hironaka. Ghosn has lost his perch atop an automotive alliance trio of French carmaker Renault SA and Japanese automakers Nissan and Mitsubishi Motors Corp. Attempts to win bail, including an offer to wear a GPS ankle bracelet and hire security guards to stop him trying to tamper with evidence, failed.

Renault delays decision on merger with Fiat Chrysler

PARIS — Renault has delayed a decision on whether to merge with Fiat Chrysler Automobiles, a deal that could reshape the global auto industry as carmakers race to make electric and autonomous vehicles for the masses. The deal still looks likely, but faced new criticism Tuesday from Renault's leading union and questions from its Japanese alliance partner Nissan. The French government is also putting conditions on the deal, including job guarantees and an operational headquarters based in France. The French carmaker's board will meet again at the end of the day Wednesday to "continue to study with interest" last week's merger proposal from FCA, Renault said in a statement. A Renault board meeting Tuesday to study the deal was inconclusive. The company didn't explain why, but a French government official said board members don't want to rush into a deal and are seeking agreement on all parts of the potential merger. The official, who spoke on condition of anonymity in line with government policy, told The Associated Press the conditions outlined by France's finance minister still "need to be met." France and Italy are both painting themselves as winners in the deal, which could save both companies 5 billion euros ($5.6 billion) a year. But workers worry a merger could lead to job losses, and analysts warn it could bog down in the challenges of managing such a hulking company across multiple countries. And a possible loser is Japan's Nissan, whose once-mighty alliance with Renault and Mitsubishi is on the rocks since star CEO Carlos Ghosn's arrest in November. Nissan CEO Hiroto Saikawa cast doubt Tuesday on whether his company will be involved in a Renault-Fiat Chrysler merger — and suggested adding Fiat Chrysler to the looser Renault-Nissan-Mitsubishi alliance instead. Saikawa said in a statement that the Renault-Fiat Chrysler deal would "significantly alter" the structure of Nissan's longtime partnership with Renault, and Nissan would analyze its contractual relationships to protect the company's interests. If Renault's board says "yes" to Fiat Chrysler, that would open the way for a non-binding memorandum of understanding to start exclusive merger negotiations. The ensuing process — including consultations with unions, the French government, antitrust authorities and other regulators — would take about a year. A merger would create the world's third-biggest automaker, worth almost $40 billion and producing some 8.7 million vehicles a year.