Testing time ahead for Nissan in United States market?

Press, 15 January 1988, Page 12

Testing time ahead for Nissan in United States market?

By

RICHARD WALKER

of Reuters Although Japanese automakers are a big force in world markets, Nissan Motor Company seems headed for a testing time in the United States after hitting a rough patch in the mid1980s. Cited as a model in the rise of Japan as an industrial power in David Halberstam’s recent bestselling book “The Reckoning,” Nissan is under pressure on several fronts. The company was already suffering from a big change of identity a few years ago when it substituted the Nissan name for the Datsun badge under which it had marketed its cars in the United States for two decades. But a weakened dollar and growing competition turned the screws on Nissan after years of growth in the U.S. market, that included the 1983 opening and subsequent expansion of a $1.3 billion vehicle manufacturing plant in Tennessee. Like all Japanese auto importers, Nissan was forced to make several currency-related price increases after the yen began strengthening two years ago. From a recent peak in February, 1985, the dollar has fallen by more than 50 per cent against the Japanese currency.

But a build-up of inventories a year ago forced Nissan’s U.S. sales office to resort to costly incentive programmes to keep vehicles moving through its 1100 dealerships. Nissan is Japan’s second biggest automaker and the world’s fourth

largest, with annual revenues of nearly $4O billion, and large manufacturing branches established or planned in the United States, Mexico, Britain and Spain. But last year, the Japanese parent company’s international automobile business suffered the shock of an operating loss attributed to the weak dollar.

Moreover, the company’s recent history has been less than overpowering to some competitors. In a recent interview, Ford Motor Company’s chairman, Mr Donald Petersen, listed only Toyota and Honda among Japanese automakers who had “demonstrated they’re outstanding auto companies” and “established as substantial competitors in any field.” In the 1987 model year that ended on September 30, Nissan’s total U.S. car and truck sales declined by 2.4 per cent to 752,881 from 771,820 a year earlier. More serious has been the decline in sales trends for its more expensive and profitable models such as the Maxima midsized car and the sporty 300ZX. Nissan executives interviewed recently by Reuters said sales problems of the past year compounded previous concerns of dealers and customers over the quality and appeal of the company’s cars and trucks. But they stress that the problems have been recognised and new leadership in Tokyo, and California is at work to make Nissan more competitive.

“Maybe it was an accurate claim that we were a conservative company, trying to please buyers in America, Europe and Japan all at the same time,” said Mr Curt Bartsch, who was recently named to head a renewed public relations effort for Nissan’s California-based sales subsidiary. “This is not the same Nissan you’ve seen before — we’re changing,” he added.

The strategy includes a new luxury car line, Infiniti, aimed at a piece of the expanding market for expensive prestige cars and the high profit margins they carry. Beginning in the autumn of 1989, a new dealer network will offer a new luxury sedan with a V-8 engine and an Americanised sports coupe derived from the Leopard model sold in Japan. The cars will be priced from about SUS2O,OOO to SUS4O,OOO, and will be joined a year later by a new, smaller four-door luxury car. Honda has already found success with its new Acura luxury nameplate, and Toyota plans to sell luxury cars in 1989 under a new Lexus marque. Footnote: Nissan is making headway in the United Kingdom, where the Nissan Bluebird will officially qualify as a British-built car, with fewer parts shipped in from Japan and local content reaching 60 per cent, this year. Nissan has just expanded Bluebird production in Britain and expects to build 40,000 cars this year. A revised sixmodel Bluebird range has just been introduced.