Poor Infiniti Sales Cheer Firm’s Luxury Car Rivals : Automobiles: U.S. and West German car makers feared that the Japanese were going to cut deeply into their share of high-priced vehicles.
Comedian Jay Leno perhaps put it best: Infiniti may not be doing so well, but, hey, at least sales of rocks and trees are skyrocketing.
After five months on the American market, Nissan’s Infiniti luxury car line--which has relied on a controversial advertising campaign that showed more scenes of nature than scenes of automobiles--is posting surprisingly weak sales.
And, although Toyota’s new Lexus luxury car line is doing well, Infiniti’s slow start has given a renewed sense of optimism to the West German and American luxury car companies that had been worried by the Japanese invasion of their upscale turf.
“It’s difficult to determine who they are hurting,” said Ed Taylor, vice president in charge of the Acura division of Honda, which was the first of the luxury car lines to come from Japan back in 1986.
“I think there is a good chance that they may have underestimated the competition in the high-group (luxury) market,” added Karl Pierce, assistant general sales manager for Cadillac.
Indeed, perhaps the biggest surprise of the year in the luxury car business is just how little Lexus and Infiniti have influenced the market.
Despite the launch of both Lexus, which was introduced in September, and Infiniti, which followed in November, sales of American-built luxury cars have soared in 1990; Ford’s Lincoln line, for instance, posted a 33% gain during the first three months of the year, while Cadillac was up more than 6%.
“It’s very difficult to see any impact on us from the Japanese,” said Joel Pitcoff, a Ford sales analyst.
To be sure, the West German luxury auto makers such as BMW and Mercedes-Benz have started to feel the heat. BMW, for example, suffered an 18% sales slide during the first quarter, while Sweden’s Volvo and Saab have also slipped. “Our early buyer studies show that a good chunk of (the Japanese firms’) business is coming from the Germans,” Pierce observed.
Yet analysts believe that Lexus and Infiniti are also taking many of their sales away from other Japanese makes, as import buyers trade up for larger and more expensive cars. The Toyota Cressida, the biggest passenger car sold under the Toyota nameplate, appears to have been hurt most by the Lexus introduction. Its sales fell 63% during the first quarter.
As a result, Lexus and Infiniti don’t seem to be eating into the sales of the traditional luxury nameplates quite as deeply as had been expected.
BMW officials point to survey data that shows that only 3% of Lexus buyers are trading in BMWs to prove that the German auto maker is retaining its customers.
“We are pretty much holding our own, and we don’t think they have had a significant impact on us,” BMW spokesman Tom McGurn said.
So far, Infiniti certainly has turned in the more disappointing performance of the two new Japanese luxury lines. The Nissan division has been selling an average of just over 1,000 units a month so far, compared to Lexus’ rate of more than 4,000 a month. While Infiniti sales rose to about 1,500 units in March, most observers still believe that Infiniti’s eccentric advertising campaign, and the fact that it entered the market months after Lexus, can be blamed for its poor start.
“I think Infiniti’s (nature) ads went on for too long,” McGurn said. “At some point, people wanted to see the car and learn more about it.”
Cadillac’s Pierce added: “I also think that being the first on the block was very beneficial to Lexus.”
Infiniti is just now addressing some of its marketing problems. William Bruce, the general manager of Infiniti, said Wednesday that a new ad campaign starting Monday will provide more specific product information about Infiniti’s cars than has been offered before. Bruce added that Infiniti is also rapidly expanding its dealer network, which will provide for a steady increase in sales over the next few years.
“Our sales trends are very positive right now,” Bruce said. “We’re very pleased.”
In addition, Infiniti has ambitious programs under way to expand its toe-hold in the luxury market with a wide range of new products.
On Wednesday, for instance, Infiniti introduced the third model in its lineup, the Infiniti G-20, a four-door sedan that will sell for less than $20,000 when it goes on sale next fall. The company also plans to offer a convertible version of its M-30 coupe this summer.
By 1992, Infiniti is expected to replace the M-30 with an updated version and is also reportedly developing a longer and more powerful version of its Q-45 sedan, currently the most expensive model in its lineup.
“I think Infiniti sales have started slower than expected, but the bottom line is the Infiniti will end up as a strong player in the luxury market,” observed Chris Cedergren, an automotive analyst with J. D. Power & Associates, an Agoura Hills research firm.
THE LUXURY MARKET
U.S. sales of luxury imports.
Month Lexus Infiniti Mercedes BMW August, 1989 1,742 -- 6,886 4,401 September 2,812 -- 5,974 5,391 November 3,287 -- 6,297 5,140 December 4,545 1,788* 7,113 4,463 January, 1990 4,135 1,071 4,654 4,919 February 4,171 1,075 5,811 4,114 March 4,861 1,549 6,891 5,436
*Includes sales from start-up date of Nov. 8, 1989.
