Hopes Riding on New Car : Nissan’s Altima Can Make or Break Firm in U.S. Market

The creative types at Nissan’s San Diego design center usually don’t keep close track of whether anyone actually buys the vehicles they help to conceive, lest such crass information interfere with their more lofty pursuits.

But with the car they were told was “the single most important Nissan vehicle they would ever design” ready to hit the road in September, head designer Gerald Hirshberg has ordered elaborate sales charts posted at the elegant glass-and-concrete center.

The Altima, Nissan’s new mid-size car due out this fall, is the No. 2 Japanese auto maker’s attempt to catch up with rivals Toyota and Honda, which have far outstripped it in the coveted U.S. market. Nissan executives are counting on the sedan to sharpen the brand’s persistently blurry image in the minds of American consumers and boost its dwindling U.S. market share.

But volume and profit are not all that is at stake here. Designed in San Diego and built at the company’s expanded Tennessee assembly plant, the Altima is a test of Nissan’s decision to plow more resources into its U.S. subsidiary and allow it more autonomy from a Tokyo parent that has steered it off track over the last decade.

The company that had Americans humming Datsun advertising themes and lusting after the high-profile 240Z sports car in the 1970s has watched its market share tumble from 5.5% in 1980 to 4.7% in 1991 as Toyota’s and Honda’s collective share zoomed from 9.3% to 14.7%.

Nissan executives blame the company’s faltering performance in part on a series of Tokyo-directed marketing and product decisions at odds with the demands of the U.S. market--the most momentous of which was the 1981 edict to drop the Datsun nameplate for the unfamiliar corporate label.

Decried by U.S. dealers and marketing executives who had spent years working to make Datsun a household name, the decision sent the brand’s image into a decade of haze from which it is only now beginning to emerge.

With that kind of track record, Haruo Ohno--the new chief of Nissan’s North American operations--attaches a certain symbolic significance to the all-American process by which the Altima name was chosen.

There was some talk--by Tokyo executives anxious not to make the same mistake twice--of retaining the established name of the poor-selling Stanza for its replacement. But after listening to dealers and U.S. sales executives plead for a clean slate and a fresh image, Ohno decided otherwise.

“They’ve been informed of the decision from me,” Ohno says of his Tokyo bosses, noting with satisfaction that there has been no negative feedback. “A name change is a big decision. To go back to Tokyo and ask for approval would have taken a long time. If there had been negative comments, I would have resigned.”

Ohno, who started his current job last July, is the first member of Nissan’s board of directors to head the U.S. subsidiary. With a leader who carries some clout in Tokyo at the helm, a $490-million expansion of the company’s Smyrna, Tenn., plant nearly complete and three U.S.-designed vehicles debuting this year, the company’s American executives say they are set for a dramatic turnaround.

Still, industry analysts caution, engineering a comeback in the fiercely competitive U.S. market won’t be easy. While the J-30 luxury car from Nissan’s upscale Infiniti division that came out in March and the Quest minivan due out this summer should provide a small boost to Nissan’s sales volume, the bulk of the company’s hoped-for revival is riding on the Altima.

With consumer tastes in constant flux, bread-and-butter family sedans have become an important staple for auto makers selling cars in the United States. And the Altima’s main competitors--the Honda Accord, Toyota Camry and Ford Taurus--just happen to be last year’s three top-selling models.

But if you ask Thomas Mignanelli, head of Nissan’s U.S. sales and marketing arm, that’s exactly the point.

“We’ve never been competitive in the mid-size segment,” Mignanelli says bluntly, referring to the Stanza’s perennially poor showing. “That’s one reason this (Altima) is so important to us.”

Take away the Camry, Accord and Stanza, Mignanelli likes to say, and you have three auto makers whose sales volume looks about the same size. But, he concedes, “that’s a pretty big chunk.”

Toyota sold 265,000 Camrys in the United States last year. Accord sales came close to 400,000, while Stanza sales barely topped 70,000. Nissan officials expect sales of the Altima to reach 150,000 a year by 1995, nearly triple the Stanza’s average over the decade.

Reaching those numbers is crucial, not just for market share but for profits--which the rising value of the yen and recessions in Japan and the United States have made increasingly hard to come by.

The low-priced, low-profit Sentra sedan and Pathfinder truck now account for about 60% of Nissan’s U.S. sales. With the addition of the Altima and Quest, Mignanelli hopes that number will shrink to about one-third. And with a mid-priced car to draw customers into showrooms, Nissan dealers should be able to sell more of the low-end Sentras and high-end Maximas too--or so the logic goes.

But the Altima’s price, likely to range from $14,000-$20,000, has not yet been set.

Several Japanese auto makers have already lost U.S. market share as a result of recent price hikes spurred by a newfound need for cash. And analysts say that Nissan--far from immune to Japan’s financial woes--may price the Altima too high for a car struggling to establish a new name, a new image and a new customer base.

“Nowadays, the market is so tough that it’s real difficult for anybody to come out with a barn-burning success,” says Chris Cedergren, an analyst at AutoPacific Group, a market research firm in Santa Ana. “But the product is there. If they can market it right, I think they have a chance.”

If there is a way to market it right, Nissan is determined to find it. The company will spend more on launching the Altima than it has on any other vehicle, for one thing. And, for another, says Bruce Gallaher, who will devote all his time to marketing the Altima over the next few months, “we’ll do whatever it takes.”

Dealers, who are looking forward to finally being able to offer customers an alternative to the Camry and Accord, are still a bit apprehensive about the car’s sloping trunk line, which represents what designer Hirshberg calls an assault against “the tyranny of the wedge.”

It’s the kind of car, Nissan executives admit, that has to grow on you. But for an auto maker known as fast and sporty trying to make the transition to an image of dependable quality, they say Hirshberg’s design--which was chosen over a competing one from a team of Nissan designers based in Japan--is what will set it apart from the competition.

“If all the people that were going to like it liked it right away, that would have told us it was too traditional,” Gallaher says. “You want a car that offends people a little bit.”

Hirshberg put it another way: “It has character. And there’s a risk connected to that. When you have character, not everybody at the party likes you right away.”

Middle of the Road

Nissan has faltered in the lucrative mid-sized car market, compared to its Japanese rivals, Honda and Toyota. Nissan is making a bid in this important market to challenge the popular Accord and Camry with its Altima, to be introduced in the fall. A look at annual sales for the Honda Accord, the Toyota Camry and the poor-selling Nissan Stanza.

Thousands of cars

Source: Ward’s Automotive Reports