Nissan Back on the Fast Track : After years of eating dust, the former leader has rejoined the sales race with a vengeance.

Has Nissan, the company once known as the Japanese champion of dull and derivative car design, turned things around?

That’s a question that the entire auto industry has been asking in recent months--and the answer seems to be an emphatic yes. With a flood of new and well-crafted cars that have just begun to hit the U.S. market, Japan’s second-largest auto maker has finally started to pull out of the steep tailspin that had in recent years devastated its sales and tarnished its image.

Nissan officials, who have been quite open in acknowledging their company’s past mistakes, have done something about it: They are in the midst of an ambitious and comprehensive revamping of the company’s entire product line. In fact, by the fall of 1990, Nissan will have replaced every vehicle that it had for sale in the fall of 1987, with the sole exception of its compact pickup truck.

In addition, the company will launch its all-new Infiniti luxury division this fall, giving Nissan entree to the upscale customers who seldom considered its products in the past.

“We’ve walked on a lot of broken glass over the last few years,” admits Thomas Mignanelli, executive vice president at Nissan’s U.S. operations and the company’s top American officer. “But now we’re doing something about it. We’re sweeping it up.”

Today, for the first time in years, industry experts are raving about Nissan’s cars, and the company’s sales are rising sharply--up more than 10% so far in 1989--in the midst of what has been a down year for the rest of the auto industry.

Nissan is also regaining some of the market share that it lost during its dark days between 1986 and 1988, and analysts now see it as a company with a focused strategy and a product lineup that should remain competitive well into the 1990s.

“It certainly has been a long time in coming, but there is no question Nissan has turned the corner,” says William Pochiluk, founder of Autofacts, a Paoli, Pa., automotive market research firm.

“Their strategy seems to be working very effectively,” adds Chris Cedergren, an automotive analyst with J. D. Power & Associates, an automotive market research firm in Agoura Hills.

That strategy seems simple enough. It has called for Nissan to develop and build cars that are different enough to stand out from the dozens of similar offerings from Toyota, Honda and the other Japanese auto makers, while still providing mainstream customers with basic transportation.

Yet it is a strategy that eluded Nissan for far too long. During the early and mid-1980s, when Japanese car companies could sell virtually everything that they shipped to the United States, analysts say Nissan seemed to become complacent and failed to keep up on automotive design.

Just as its cars started getting long in the tooth, the company also lost its marketing focus in the United States. Its disastrous name change from Datsun to Nissan, which was widely resisted by dealers, only served to confuse and turn off customers and cost the company precious name recognition for years.

Later, Nissan’s advertisements, widely derided in the advertising community because they featured talking heads instead of cars, left car buyers wondering what the commercials were selling.

But it was the rapid appreciation of the Japanese yen, which led to soaring prices for Japanese cars beginning in late 1985, that really devastated Nissan.

With Japanese sticker prices skyrocketing and dozens of competitive new offerings from which to choose, consumers became selective about which import to buy. Nissan’s stodgy old cars didn’t stand a chance.

As a result, from a 1985 peak of more than 575,000 units, Nissan’s passenger car sales plunged by more than 100,000 units by 1988 to just over 472,000. Meanwhile, its light truck sales fell just as hard, to just over 168,000 last year from a 1985 peak of more than 255,000.

“Nissan had one of its worst years in a long time in 1988,” says Cedergren. “And even then, they had to virtually give cars away (through rebates and other sales incentives) to keep sales from going even lower.”

‘Screaming for Product’

For a proud company, the sales decline was humiliating, especially since Nissan could no longer sell all the cars that it was allocated under the Japanese government’s auto export quota system. Even worse, Honda--ranked a distant third behind Toyota and Nissan in the Japanese home market--was outselling Nissan in the United States.

Still, Nissan’s top Japanese executives at first didn’t quite understand their American crisis.

But their U.S. dealers quickly let them know what the problem was.

“We were screaming for product that was not outdated,” recalls Steven Piano, vice president of Al Piano Nissan in Westlake Village. “They just were not making enough changes, at least not any changes that the public could see.”

Nissan finally started listening, first by bringing in a new U.S. management group in 1987, headed by the 43-year-old Mignanelli, who was formerly a top marketing official at Ford’s Lincoln-Mercury division.

Last fall, the first of the new products started to arrive as well. In October, Nissan introduced an enlarged Maxima sedan--designed, the company says, specifically for the U.S. market. The 240SX two-door coupe, Nissan’s new entry into the performance market, also came at the start of the 1989 model year.

Those two models have led Nissan’s sales recovery so far in 1989. Cedergren estimates that Maxima sales will soar to 110,000 this year from 75,000 in 1988, aided by a J. D. Power quality study that found it was the most trouble-free car on the road this year. Meanwhile, 240SX sales should hit 80,000, compared to 1988 sales of just 32,000 for its predecessor, the 200SX.

Nissan followed in March with the Axxess, an all-new minivan, and in May with its new 300ZX sports car, the widely anticipated redesign of its once popular 280Z, which was dropped in 1984.

Nissan sees the new Z as an “image” car that will help restore Nissan’s reputation among auto enthusiasts, who deserted the Z models of the mid-1980s.

High Tariff Hurt Pathfinder

Still to come this fall as a 1990 model is Nissan’s redesigned Stanza compact, as well as the first four-door version of its Pathfinder utility vehicle.

After the four-door Pathfinder comes out, Nissan may drop its existing two-door version, which has taken a beating since January, when the federal government slapped a 25% tariff on all imported two-door utility vehicles. Nissan was forced to raise Pathfinder prices by more than $2,000, and sales of the once-hot vehicle plunged.

In November, meanwhile, Nissan’s Infiniti division, with separate dealerships, will introduce its two new luxury models, designed to compete with Honda’s successful Acura division and Toyota’s upcoming Lexus line.

Infiniti’s first two cars will be the two-door coupe M30, selling for about $22,000, and the pricier four-door sedan, the Q45, which will go for $35,000 to $40,000. Nissan has not announced any official sales targets for Infiniti, but analysts say the company expects to sell 40,000 to 45,000 cars through Infiniti in its first full year in 1990.

Later, in the fall of 1990, Nissan plans to introduce a redesigned version of its Sentra subcompact, to be built at Nissan’s Smyrna, Tenn., assembly complex. Nissan is also expanding its Smyrna plant, which now builds both Sentras and light trucks, in order to produce a second passenger car line there by 1991 or 1992.

Finally, Nissan has worked out a deal with Ford calling for the two auto makers to jointly produce a new line of minivans in Ohio. Mignanelli says that van, scheduled for production in late 1992 or early 1993, will be slightly larger than the new Axxess, and may in fact end up as the replacement for Axxess.

Yet despite the outpouring of new products, Nissan hasn’t solved all of its problems.

In the truck market, Nissan is still in the doldrums. And even in its core passenger car business, Nissan is facing stiff new competition from the other Japanese contenders, who aren’t standing still either. Toyota, for instance, is bringing four new products to market over the next year.

New Tests Ahead

That’s not counting Lexus, which will beat Infiniti to market by several months.

As a result, some analysts say Nissan’s new products will face a stiff test over the coming months, as they battle to stand out in the increasingly congested U.S. market.

“Over the next year to 18 months, we will see how they do against this outpouring of products from the rest of the Japanese,” says Tom O’Grady, president of Integrated Automotive Resources, a Wayne, Pa., market research firm. “I think it will be hard for them to continue to gain share in that environment.”

But Nissan officials, and other analysts, still think that Nissan’s recovery will stay on track. Mignanelli says he is optimistic that this year, Nissan may be able to sell all of the cars that it is allowed to import from Japan under the auto quota system--for the first time in three years.

“What this shows,” adds Cedergren, “is just how important design is in selling cars.”