Nissan Revs Up Altima
Acknowledging that its approach to the fiercely competitive mid-size-car market in the U.S. was a mistake, Nissan Motor Co. on Wednesday unveiled a completely redesigned 2002 Altima.
Nissan’s competitive position in the key market has been hobbled in the past by what critics call the company’s misguided pincers strategy, coming in at the low end of the market with its underpowered Altima and at the high end with its muscular Maxima.
Nissan is now setting its sights squarely on the category-leading Toyota Camry and Honda Accord, which battle it out annually for best-selling car of the year.
“Customers didn’t get it: the Maxima was too much and the Altima wasn’t enough,” said Jed Connelly, senior vice president for sales and marketing, after unveiling the new Altima at the New York International Auto Show.
The new Altima will be powered by a standard four-cylinder engine but will offer an option for a six-cylinder engine, the same marketing strategy that Honda uses with the Accord and Toyota uses with the Camry.
Nissan has high hopes in the new Altima, counting on it to play a crucial role in the turnaround of the troubled Japanese auto maker. Nissan is hoping the vehicle can account for a hefty 25% of its sales volume in the U.S. after it goes on sale in September.
Ford Motor Co.’s Taurus outsells the Altima, but many Tauruses, up to 45% by some industry estimates, are sold to rental car fleets and not to retail customers, so Nissan views the Camry and Accord as the ones to chase. General Motors Corp.’s many attempts to be a heavyweight in the market has borne little success.
Renault of France acquired a controlling interest in Nissan, awash in debt and red ink, in 1999. Nissan President Carlos Ghosn, then a Renault executive, was sent to Tokyo to fix Nissan and began implementing a three-year plan last April that included plant closings, layoffs and elimination of slow-selling models.
He has reduced costs by 8% and said he expects a 10% reduction in costs by the end of the year. “We have accomplished 50% of the plan in 33% of the time,” Ghosn said.
Ghosn, who had vowed to resign if he could not turn Nissan around, said late last month that he would be staying on as head of the Japanese auto maker because of the success of the recovery plan.
“I will be here as long as it is necessary to ensure that Nissan is on track,” he said. Nissan also restructured its management last month to give Ghosn direct control of all operations in the main Japanese market.
As part of the revival plan, he has instituted an aggressive product-development program that is resulting in the introduction of 10 new or redesigned models in two years for Nissan and its luxury division, Infiniti, products that Ghosn pledges will be profitable.
They include the Altima, the much-anticipated return of the Nissan Z sports car, a next-generation minivan, a full-size pickup truck, a luxury sport-utility vehicle and a “crossover” car-SUV for Infiniti.
“We are repositioning our lineup to achieve greater participation in the market,” Ghosn said, but he wouldn’t give a prediction for U.S. market share for Nissan, which stood at 3.9% last year, up from 3.6% in 1998.
“We are product-driven, not market-share-driven,” he said. “So you end up growing the company in a very selective way. I think our market share will grow, but I think in terms of contribution to profit.”
The new Altima is the third redesign of a vehicle first introduced in 1992. The whole Nissan strategy surrounds the vehicle’s engine lineup. Nissan offers a choice of a 2.5-liter, 180-horsepower four-cylinder engine or a remarkably powerful 3.5-l V6 that turns out 240 hp.
Nissan is banking on being competitive with the Camry, which offers a four-cylinder, 133-hp engine or a 194-hp V6, and the Accord, which has three engines ranging from 135 to 200 hp.
Although the Accord, which sells for $15,400 to $25,000, was once the top-selling passenger car in the U.S., the slightly higher-priced Camry has held that title for the last four years. Camry is priced at $17,700 to $30,500.
No price has been decided for the Altima, but the current four-cylinder model ranges from $15,000 to $20,000. The inside is larger than the previous version by 9 cubic feet, giving it a larger interior than the current Camry or Accord, Connelly said.
“We think there is room for three in this segment,” Ghosn said.
But there also could be room for confusion in the market, as the six-cylinder Altima will boast a larger power plant than the current 222-hp Maxima and its sister Infiniti car, the 227-hp I30.
(Nissan will introduce a 260-hp Maxima this summer and today will unveil the Infiniti I35, expected to have 265 hp, to reposition them above the upcoming Altima.)
“When the Altima gets six cylinders, it will be harder to differentiate,” said Derek Humphrey, manager for North American forecasting for J.D. Power & Associates in Detroit.
Another big question looms when a totally redesigned Maxima comes off the same platform as the Altima in a couple of years, Humphrey said. He expects the upscale Maxima will be radically restyled to set it apart from the Altima.
Executives from competing auto makers said they were not worried of an Altima onslaught.
“There’s always someone out there nibbling away at us,” said Tom Elliott, executive vice president of American Honda.
Toyota has an all-new Camry scheduled to be unveiled this year. Toyota has been tight-lipped about the new Camry, acknowledging only that one is coming, but hasn’t given details about its engine or size.
“The last hand dealt has got to be the best,” Toyota Chief Operating Officer James Press said Wednesday. “Fortunately for us, the Altima is coming out first.”
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Nissan’s New Strategy
Nissan is betting on its new Altima, unveiled at the New York International Auto Show. With the redesigned 2002 Altima that offers both four- and six-cylinder engines, Nissan is looking for a big boost in sales and setting its sights on the Honda Accord, Toyota Camry and Ford Taurus. U.S. sales of Altima and its competitors:
Sources: Autodata Corp., Automotive News Data Center
