Nissan chief executive officer Carlos Ghosn said he expects Europe's automobile industry to take many years to recover from shrinking demand and excess capacity.
Nissan is "preparing for many mediocre years" in Europe, Mr Ghosn said today in an interview in Hong Kong.
While it faces overcapacity, the region "will not see any kind of Armageddon," he said.
Auto sales in Europe have collapsed to their lowest level in 17 years, as the sovereign debt crisis saps demand amid rising unemployment and slowing economic growth. Nissan will manage its capacity in the region to match demand, Mr Ghosn said.
"The overall market is shrinking, so I would expect Nissan to cut back on production," said Mitsushige Akino, executive director at Tokyo-based Ichiyoshi Asset Management.
"It's very likely for the current situation in Europe to continue for several years, and Nissan's sales growth will probably be in line with the market."
Nissan fell 0.5 per cent to 736 yen as of 12.53pm in Tokyo trading, while the benchmark Nikkei 225 Stock Average gained 0.5 per cent.
The Japan-based carmaker sold 41,832 units in Europe last month, a 3.1 per cent increase from a year earlier, according to the company.
Nissan plans to build more than 5 million cars this year, Mr Ghosn said, with growth coming from Southeast Asia and the US.
"Myanmar may be the star of future" along with Indonesia and Vietnam, Mr Ghosn said.
He said he hopes the new Altima midsize sedan will take "top position" in the US, where the industry continues to recover.
Japan's second-largest automaker in July reported a 15 per cent drop in first-quarter profit, falling short of analysts' estimates, as it increased incentives and marketing spending in the US on models including the Altima.
Bloomberg