After four recalls of its 1987-90 minivans failed to fix defects that could cause engine fires, Nissan Motor Corp. U.S.A. threw in the towel Thursday by announcing it will buy back and destroy all 33,000 vehicles.
The buyback is highly unusual and by far the largest ever in the United States. Fiat's repurchase of 4,000 1972-74 sedans with rust-prone suspensions was the only other major buyback for safety reasons.
The action could cost Nissan more than $200 million. Nissan said it expects to pay $5,000 to $7,000, depending on age and mileage of the vehicle. The move underscores the ever-greater lengths that auto makers must go to to maintain their image with increasingly demanding customers.
"We're paying higher than you'll ever get as a used car or a trade-in," a Nissan spokesman said. The company's vice president and general manager, Earl Hesterberg, said, "This program is designed to satisfy our customers."
That is particularly important these days to Nissan, whose Japan-based parent company is losing money while the U.S. arm has been making a comeback from years of weak sales blamed on poor products. Nissan was the only Japanese auto maker to pick up U.S. market share last year.
Nissan, based in Torrance, took the voluntary action as the National Highway Traffic Safety Administration was auditing the results of the latest recall, which began in September.
The agency said five or six engine fires have been confirmed in vehicles repaired last fall by Nissan dealers. In all, there have been 153 fires reported in the Nissan vans since 1987, but there have been no deaths or injuries.
Under the buyback program, the company is offering to purchase all the Passenger Van XEs and GXEs at current retail value. The company will also provide all the minivan owners a $500 coupon toward the purchase of any new or used Nissan vehicle.
The NHTSA approved the program. "We will continue to monitor the situation," said Bill Boehly, assistant administrator of enforcement.
The agency itself has taken heat over its handling of the Nissan minivan problems. The case marks the first time one model has been recalled four times for related defects.
Not everyone is impressed with the Nissan offer. Sean Kane, a senior associate for Ralph Hoar & Associates of Arlington, Va., a vehicle safety research firm, said it falls far short of satisfying Nissan's legal responsibilities.
"They knew about the problem for seven years and didn't do anything about it," said Kane, who has assisted in lawsuits filed against Nissan.
Maria Christian of Moreno Valley agrees. She and her husband bought a 1987 minivan from Nissan and within a month the vehicle was in the shop because the passenger compartment had filled with engine smoke.
The company undertook a repair at no charge. But the problem persisted. "We've had continual overheating," she said. "It's been a constant problem and they don't fix it."
The minivans with the fire problem are a different vehicle than the Nissan Quest, a Nissan-designed minivan built at a Ford Motor Co. plant near Cleveland.
Nissan no longer makes the minivans involved in the buyout. They were imported from Japan and sold largely in the 1987 and 1988 model years. California, Texas and Florida were the most popular markets for the vans.
The company had problems with them nearly from the time of their U.S. introduction. In July, 1987, Nissan recalled several thousand vans to replace a defective valve gasket. A leaky gasket could cause oil to drip onto the manifold, igniting a fire.
There were subsequent recalls in 1990, 1992 and 1993 involving all 33,000 vehicles. All the repairs were for separate problems that could cause fires in the engine compartment.
The last recall began in September. It involved extensive and complex repairs to the cooling system to prevent overheating that could result in an engine fire. The procedure included installing an improved cooling system, with a new radiator, electric fan and warning system in case of failure.
Despite those repairs, the company said it continued to receive reports of problems. "There have been a few," Nissan spokesman Mark Adams said.
The company also found that repairs were so extensive on some vehicles that it made more sense to buy back the vehicles than to repair them. The company did that on a selective basis last fall.
But word of the problems resulted in several class-action lawsuits filed on behalf of minivan owners. Nissan said one of those in California was settled as a result of its buyback offer.
Nissan said it is doing what it can to repair relations with the minivan owners. Although belatedly, it is following the aggressive strategies pioneered by Lexus, Saturn and others in which special care is lavished on owners of recalled vehicles to try to turn the experience into a plus.
* U.S. AUTO SALES SOAR
January sales of cars and trucks were up 14.3%. D2