Nissan Getting Strong U.S. Boost From Altima, Quest
Nissan’s strong sales of its American-built Altima sedan and Quest minivan could be a hint to other Japanese makers--future growth in U.S. market share will almost have to come from North American production.
Because of Altima and Quest, Nissan, Japan’s No. 2 auto maker, now has a shot with customers it all but conceded in the 1980s as it built a reputation for tight-handling, high-performance sports cars such as the 300ZX.
Still, Nissan is struggling at home along with Toyota, Honda, Mazda and Mitsubishi. The shaky Japanese economy, dismal auto sales in their home market and the currency exchange problems of a strong yen are making it hard for Japan’s Big Five to support their U.S.-based operations.
Nissan spent $490 million to expand its already mammoth manufacturing complex in Smyrna, Tenn., to make the Altima. But Ford Motor Co., which builds the Quest and its Mercury Villager minivan at Avon Lake, Ohio, paid the entire $900 million to expand and retool the plant. Nissan engineered both minivans.
The Japanese may have further problems next year, if President-elect Clinton honors the request of the U.S. Big Three auto makers to reclassify import duties on imported minivans and sport utility trucks.
Importers now pay a 2.5% entry fee on these vehicles, which are taxed as cars because they have four doors. General Motors Corp., Ford Motor Co. and Chrysler Corp. want Clinton to have them counted as trucks, which would increase the tariff to 25%.
“That would lock the Japanese out of the two most lucrative markets,” said John Casesa, an auto industry analyst with Wertheim Schroder & Co. “The Japanese realize they can only grow their U.S. business further through capacity expansion, and that’s a very expensive way to grow.”
Earl Hesterberg, vice president and general manager of Nissan USA’s Nissan division, said he’s more concerned about what Clinton will do for the U.S. economy than potentially protectionist trade moves.
“Based on the campaign, there’s concern for free-trade issues,” he said. “But on closer look, it would appear his record and his economic advisers are free traders.”
The Altima has helped Nissan USA recover from the failure of its Stanza. Nissan had sedan offerings at the lower and upper ends of the price spectrum with the Sentra and Maxima. But the Stanza--while solid and relatively trouble-free--was a design, marketing and sales disappointment.
“What Honda’s done with Accord, what Toyota’s done with Camry is they bring the flood of traffic in right at the middle of the lineup, right around $15,000, and they make it go either way,” Hesterberg said in an interview this week. “That’s where our dealership body has not had the same advantage, with not having your strongest punch up there in the middle.”
Altima sold 21,903 units in its first three months, backed by an advertising campaign that Hesterberg said is costing “the better part of $100 million.”
Launching a new entry in the rough-and-tumble mid-size sedan segment was daunting, especially since so much free auto press went to Chrysler’s trio of new mid-size cars, launched about the same time as Altima.
