Japan’s export credit agency to provide $2 billion aid to Nissan
The money will help Nissan in the US auto markets as JBIC has already provided loans for overseas sales financing to Honda and Toyota Motor
Japan’s state-owned export credit agency has agreed to give Nissan Motor up to $2 billion as part of a credit agreement to help it finance car sales in the United States.
The money is part of a $4.1 billion credit agreement for Nissan Motor Acceptance Corporation, a unit of Nissan North America, Japan Bank of International Cooperation (JBIC) said in a press release.
The money will help the Japanese company to sell cars in the world’s second-biggest automarket ater China by allowing it to provide customers with loans that they can repay in monthly instalments, the export credit agency added in the statement.
The United States “is an important market for Japanese automobile manufacturers. Sales finance has become an important tool in business strategy”, JBIC said.
“This case provides financial support for Nissan’s overseas business development,” it added.
JBIC has already provided loans for overseas sales financing to other automakers, including a $78 million October agreement with Honda Motor Co in Brazil, and one in September for Toyota Motor Corporation in South Africa. JBIC did not disclose the amount for that deal.
The latest agreement with Nissan is more than three times as much as a $582 million loan extended by JBIC in July to help it finance car sales in Mexico.
A JBIC spokesman said the government export credit agency applied the same lending standards as private banks.
Nissan, Japan’s third-largest automaker, is focusing on key markets as it pulls back from the rapid expansion led by ousted Chairman Carlos Ghosn.
It is looking to raise market share with new models in the United States, China and Japan as they rebound from a demand slump triggered by the COVID-19 pandemic.
“We have financing from a variety of different ways and JBIC is one of them,” a Nissan spokeswoman said.
This month, Nissan cut its operating loss forecast for the year to March 2021 by 28%, albeit still to a record of about 340 billion yen ($3.2 billion), helped by a rebound in demand, particularly in China.
Meanwhile, Japan’s government cut its view on capital spending in November for the fith time this year as companies trimmed investment, and said overall economic conditions were still severe due to the coronavirus pandemic.
The world’s third-largest economy rebounded sharply in the third quarter from the COVID-19 hit, largely thanks to stronger consumption and exports, but a resurgence in infections at home and abroad is weighing on the outlook.
“The Japanese economy remains in a severe situation due to the novel coronavirus, but it is showing signs of picking up,” the government said in its November economic report.
The government said the impact from policy measures at home and improvement in activity overseas supported hopes for a continued rebound in the economy.
But it also warned “full atention” should be given to further risks from the pandemic, at home and abroad.
Economy Minister Yasutoshi Nishimura warned that any increase in coronavirus infections could weigh on consumer sentiment and overseas economies, posing a downside risk to consumption as well as exports and output.
Prime Minister Yoshihide Suga instructed his cabinet earlier this month to compile a package of stimulus measures to cushion the blow from the pandemic and push forward structural changes in the economy.
“We want to put together measures while carefully watching the ( coronavirus) impact, especially on regional economies and everyone working in the tourism sector,” Nishimura said.
Among key economic elements, the government said business expenditure has been decreasing, slashing its assessment of the component for the sixth time since last upgrading it in September 2018.
Japan has seen relatively low capital spending growth compared to other major countries over the past 15 years, which is a reflection of the expected growth rate of the domestic market, the official said.
Japan needs solid capital spending to offset risks to its export-reliant economy from abroad.
The government upgraded its view on output, saying it was picking up due largely to solid car and transport equipment production.
It let unchanged its assessment of the other remaining components in the report, such as exports and employment conditions.
Separately, Japanese shares closed at a more than 29-and-a-half-year high on Thursday, as tech shares tracked overnight advances on the US Nasdaq, but worries over latest coronavirus restrictions at home hindering economic recovery capped gains.