TOKYO -- When Nissan Motor Co. boosted annual sales by a million vehicles last year, Chief Executive Carlos Ghosn took a victory tour of the company's headquarters here to shake hands and congratulate employees.

Nobody at Nissan is celebrating today. The company, Japan's second-largest car maker by volume (after Toyota Motor Corp.), is so far the only major Japanese player in the auto industry to report slack sales. Disappointing results have been reported in Europe and North America. Sales in Canada are down 12% so far this year, and sales of passenger cars in its home market of Japan are down 17%. This week, Nissan said sales in Japan were hit especially hard in April, with a 32% decline in passenger-car sales from April 2005. Exports from Japan were down 18% in April.

The sales drops mean Nissan is slowing production just when states including Michigan, Ohio and Indiana are vying for new plants from Honda Motor Co. and Toyota -- both of which are ramping up world-wide production to meet growing demand. Nissan's global production was down 10% in the first four months of this year, compared with the same period in 2005, including a 13% decline in the U.S. In April the fall was 21%, to 230,000 vehicles.

The reason for the decline, say outside observers, is that Nissan steered the bulk of its resources toward achieving growth targets. In particular, it released a range of new models to help meet the September 2005 deadline Mr. Ghosn had publicly set to increase annual sales by a million vehicles. Once that deadline had passed, Nissan had few new models to entice motorists into its showrooms.

Nissan's sudden loss of sales and production momentum is a personal setback for Mr. Ghosn (pronounced Goan). The Brazilian-born Frenchman, who became the rare foreigner running a Japanese company when he took the top job at Nissan in 1999, is lionized in the global auto industry for bringing the company back from the brink of bankruptcy. However, the current slump throws a critical light on a key Ghosn management technique: motivating employees through widely publicized goals -- he calls them "commitments" -- such as last September's sales deadline.

When that deadline -- to be the culmination of a three-year business plan -- was announced in 2002, Mr. Ghosn promised that Nissan would boost sales to 3.6 million cars in the final year of the plan from the 2.6 million recorded the year before the plan started. At last year's celebration of meeting the deadline, Mr. Ghosn declared a watershed: "The revival process of Nissan today is officially finished."

But sales soon began to soften in many key markets, showing a downside to Mr. Ghosn's method. Critics acknowledge Mr. Ghosn's commitments have done wonders to revive Nissan over the past six years. But recent quality issues on such vehicles as the Titan pickup and Armada sport utility, built at the company's plant in Canton, Miss., struck some as signs that Nissan might be pushing too hard. Now, observers say, the recent sales slump indicates the need for a more sustainable business model that focuses less on rushing to meet near-term goals.

"They've been running a series of sprints," says Michael Yoshino, professor emeritus at Harvard Business School. He says the sales drop shows the company is making a transition to a less frenetic business model -- one that stresses endurance rather than speed. "The transition from sprint to marathon isn't an easy one," Prof. Yoshino says.

The issue is important for Renault SA, which owns 44% of Nissan. Mr. Ghosn, who runs Renault and Nissan, has set a goal of boosting the French car maker's sales by 800,000, to 3.3 million a year by 2009.

Despite Nissan's falling sales, net profit rose to $1.36 billion in the first three months of 2006, up 9% from a year earlier. That was in part because of favorable exchange rates, which make overseas profit more valuable when converted into Japanese currency. It was also because Nissan hasn't let its dealers discount as heavily as General Motors Corp. and Ford Motor Co.

Mr. Ghosn, speaking to reporters recently, conceded the current sales slump was the result of Nissan not spacing products more evenly to avoid a product drought. "In the five years coming, we have a much more balanced system of product launch region-by-region," he said.

Indeed, Nissan has already shown signs of greater discipline. A reworked version of the compact Sentra was slated to hit the market last year, but the new design didn't test well with consumer focus groups. Nissan could have gone ahead with the makeover, which would have helped ease the current sales slide, but people familiar with the matter say Mr. Ghosn decided to redo the design rather than market a mediocre version.

The revised Sentra is now slated to come out in October. And by the end of this year, Nissan's product drought should be over, with the release of a slew of new cars. These will include highly profitable models like the G35 sedan (sold under Nissan's premium Infiniti nameplate) and the Altima sedan. "The situation goes from being parched to drinking from a fire hose," says Christopher Richter, an analyst at brokerage CLSA Asia-Pacific Markets.

Still, Nissan says sales will likely stay weak until the new products hit the market in force in the final quarter of 2006. People at Nissan "say they have been running for the past five years," says Prof. Yoshino. Now, he adds, many of them seem ready to proceed at a more "measured pace."