Nissan Plays Tough on Big 3’s Home Turf
Eyebrows raised when Nissan Motor Co. said it would challenge Detroit in the full-size pickup market.
Not even Toyota Motor Corp., maker of the top import brand in the U.S., has had much success in the Ford-Chevy-Dodge-dominated big pickup arena.
But Jed Connelly, senior vice president for sales and marketing at Gardena-based Nissan North America, predicts Nissan dealers will sell 100,000 of the company’s new Titan full-size pickups this year -- more than twice Toyota’s 2003 Tundra sales.
His confidence could be dismissed as cockiness. On the other hand, much of the credit for Nissan’s return to profitability since its low point five years ago -- when, barely afloat, it was rescued in a buyout by France’s Renault -- is due to the company’s performance in the U.S., where Connelly has been the top American executive since 1998.
In an interview on the eve of the annual North American International Auto Show in Detroit, Connelly talked about that performance and offered his insights on the coming year.
Question: Nissan Chairman Carlos Ghosn has said he expected the company to sell 1 million cars and trucks in the U.S. in its next fiscal year. Yet although you’ve been gaining an average of 10% a year for the last three years, you didn’t quite hit 800,000 for calendar 2003. How do you get to a million?
Answer: We’ll sell close to 850,000 for this fiscal year, and we’ve got our first full year of Titan plus a full year of sales for the new Pathfinder Armada [full-size sport utility vehicle] and the redesigned Quest [minivan]. I don’t think we’ll have to wait for the fiscal year to end [in March 2005]. I think we’ll come close to 1 million for the 2004 calendar year.
Q: If you sell a million and everyone else hits their predictions, which so far are pretty upbeat, 2004 could be a heck of a year. What’s your outlook?
A: Well, everything I read points to a good year. The federal tax cuts will start to kick in, employment is growing, people are feeling more positive. I look for the car market to be pretty solid, with sales in the mid- to upper 16-million region.
Q: You don’t think that two years of incredible incentives and discounts have pulled a lot of future buyers into the present and diminished the market for the next few years?
A: No. We’ve got good population growth with lots of new young buyers who’ll be looking for a first new car. And the industry keeps creating new segments, such as crossovers [SUV-styled vehicles built on sedan platforms for improved ride and handling], and offering new technologies. People want the newest and latest. That keeps bringing them back into the marketplace.
Q: Can you do it without the incentives that have dominated the market lately?
A: We can. We’ve already reduced our incentive spending considerably. We’re down about 50% from three years ago, and we’re only spending about two-thirds of the industry average [of about $3,000 a vehicle] now. We’re able to do that because we have popular new products, like the 350Z [sports car] and the Murano [crossover SUV], that don’t need much support.
Q: Prediction time. What’s going to be hot this year, and what’s not?
A: I really don’t see anything getting cold and dropping out. On the hot side, I wonder if we won’t see a little increase in compact pickups. That market has bottomed out and sales won’t drop anymore, and if the industry starts offering more size and more power in that segment, it could come back a little.
Q: Guess it’s no coincidence that you are planning on announcing a redesigned Frontier compact pickup this week at the Detroit show that’s bigger and has more horsepower than the current version. What else is going to be hot?
A: I think crossovers will continue to be a growth segment, and I’m seeing some interesting things in the entry level, especially what Toyota is doing with Scion [a new brand aimed at the youth market].
Q: Is there a Nissan version of Scion in the works?
A: No. But we are looking at broadening our offerings in the Altima line, and there’s a new Sentra [compact sedan] that’s about 18 months away, with a very different appeal than the current model. We are interested in getting young people into a Nissan as their first new car, so we can keep them in the family with our other offerings.
Q: You’ve left the full-size truck market off your hot list, yet you’ve just entered it with the Titan.
A: Yes, we see more growth potential. Not explosive, but with about 70% of all full-size pickup buyers staying in the segment and buying another, there’s a lot of opportunity.
Q: With Toyota approaching 2 million in annual sales in the U.S. and Honda predicting 1.4 million for 2004, you’ll still be in third place among import brands if you hit your 1-million goal. Are you satisfied with that?
A: Ranking doesn’t matter. Our goal, as voiced by Mr. Ghosn, is to be profitable. He recently said that he expected the company to hit its fiscal year profit goal of 820 billion yen [$7.3 billion]. That will be a third straight year of record profit, and U.S. operations are an important part of it.
Q: One segment you don’t play in right now is hybrids. Toyota’s got the Prius and a couple more coming. Honda’s got the Insight and Civic. When does Nisan hit the road with one?
A: 2005, with an ’06 model year Altima hybrid. And the Altima shares a platform with the Maxima, Quest and Murano, so there are other possibilities if the demand is there.
Q: 2004 looks a little bare of new Nissan product. Can you keep the momentum?
A: We have the Titan, which began selling in December, the new Frontier and the new Pathfinder with three rows of seating [also debuting at the Detroit show] and Infiniti gets the new QX56 full-size SUV in March. It’s not the avalanche of new product we’ve had. But the trick isn’t quantity, it’s quality.
Q: Speaking of that, Nissan gets good marks for engineering, for power and performance and, for most of its products, for design. But you’ve been dinged by critics for poor interior quality in a number of your vehicles. Are you fixing that?
A: We’ve had a lot of new product in a short period, so we’ve had some problems. But we got most of it right and what we didn’t we’re going to correct as quickly as possible.
When you see the 2005 Altima with its all-new interior, and the [Infiniti] M45 that we’ll show at the New York Auto Show [in April], you’ll see what Nissan can do.
Q: Nissan’s had a pretty good run lately. What advice can you offer to competitors that are losing market share?
A: The answer is simple, but the execution is difficult. You’ve got to have the right products, products people want, at the right prices, and you’ve got to market them consistently so the message gets through to people. It’s not critical to be in every segment, but it is critical that you have to be very good in whatever segments you do play in.
