The company and its domestic rivals are also struggling to stand their ground in China's market as fast-growing electric vehicle firms backed by Beijing race ahead.
Net profit in the first quarter plunged 73 percent year-on-year to 28.6 billion yen ($190 million), Nissan said -- far below analyst expectations of 97.1 billion yen.
The auto giant now predicts a full-year net profit of 300 billion yen ($2 billion), down from 380 billion yen previously forecast.
"Our first quarter results were very challenging" and "we have implemented measures to recover our performance," CEO Makoto Uchida said in a statement.
"From the second half we aim to maximise sales of new and refreshed models to achieve the revised forecast of sales volume and profit," he added.
Although global sales remained even, "profit was impacted by increased sales incentives and marketing expenses to meet intense sales competition and optimise inventory," particularly in the United States, Nissan said.
The disappointing first-quarter earnings come after the company nearly doubled full-year net profit in 2023-24, partly thanks to the weak yen inflating its takings.
On Thursday, Nissan shares tanked 11 percent right after the earnings release but recovered to close down 6.98 percent.
In China, competition also "remained intense", but Nissan performed well among international brands, chief financial officer Stephen Ma said.
Nissan has struggled with sales in the Chinese market, where capacity is too high, despite some improvement in recent months.
Uchida said at a Financial Times summit in May that Nissan would work with Chinese firms to launch five new electric or hybrid vehicles in the country within the next two years.
"We are committed to staying in China, but how to stay in China has drastically changed," Uchida said then, according to the newspaper, calling it "a survival game".
Japanese media this week cited informed sources as saying that Nissan had closed a factory west of Shanghai as part of efforts to cut its production capacity in the country.
The plant in Changzhou, a joint venture with state-owned Chinese auto company Dongfeng Motor, only opened in 2020 and produced some 130,000 vehicles each year, Jiji Press said.
Japan's Honda is also struggling with sales in China and plans to reduce its annual car output capacity there by 50,000 units, Kyodo News reported on Thursday.
China overtook Japan as the world's biggest vehicle exporter last year, helped by its global dominance in electric cars as firms such as BYD speed ahead of international rivals.
