Nissan downbeat on Europe target but beats rivals

PARIS (Reuters) - Nissan Motor Co will have difficulty meeting its annual sales target set before car demand started to slide in Europe, but is confident of expanding its market share in the region, a top executive said on Tuesday.

"We had and still have a plan to grow in Europe," Eric Nicolas, Nissan Europe's senior vice president of administration and finance, said at the Reuters Auto Summit in Paris.

"(But) it's extremely hard today for anyone to pretend that what they had planned six months or a year ago is still the current solid plan for the six months to come."

At the beginning of its business year that started in April, Nissan, owned 44 percent by Renault SA, had targeted a rise of about 10 percent in its European sales to around 700,000 cars for 2008/09.

But with sales across Western Europe tanking in the past half year, Nissan's growth in April-August has been limited to 2.3 percent compared with the same period a year earlier. More recently, automakers have seen car demand fall even in some Eastern European countries, and slow down significantly in Russia -- virtually the last remaining hope for growth in the industry.

"Russia is our top market now, and we're feeling some anxiety there too," Nicolas said, noting that sales, while still up by 20-plus percent year-on-year, were flat or down month-on-month.

But Nicolas stressed that Nissan was beating its rivals with the biggest market share growth so far this calendar year thanks largely to brisk demand for its UK-built Qashqai crossover.

That vehicle, which was designed and engineered specifically for Europe, is now the second best-selling model for Nissan globally behind the Altima sedan. Its success prompted Nissan to sell and build the car in Japan, under the name Dualis.

Nicolas said Nissan expects to sell more than 200,000 Qashqais in Europe this business year -- the first full year of sales for the model -- up from around 160,000 in 2007/08. Nissan will launch a three-row version of the model next month.

The popularity of that car, which Nissan attributes to the unique blend of the comfort of a sedan with the performance of a 4X4, has also helped Japan's No.3 automaker achieve industry-beating profit margins in Europe, Nicolas said.

"I don't see many other general (non-premium) manufacturers making more profit (margins) in Europe in 2007 than Nissan," he said, although he conceded that margins were coming under pressure this year from high raw materials costs and the shift toward smaller cars.

(Editing by Elaine Hardcastle)