SMYRNA, TN –Motor Co. Ltd. is scaling back U.S. sales volumes for its Maxima midsize sedan some 30% from last year’s levels and 45% from its peak.
The reduction to a forecasted 70,000 units from 98,000 in 2003 and high of 131,000 in 1999, is a deliberate move to coax the vehicle up market, not a result of capacity constraints, officials say.
|is cutting volume on Maxima 30%.|
The new, sixth-generation, ’04 Maxima now is produced in Smyrna, TN, sharing the FF-L platform with the higher-volume Altima. And Jed Connelly, Nissan senior vice president-sales and marketing, says he views the two midsize sedans in the context of combined total sales, which will be much larger than it was under the last generation cars, thanks to booming Altima sales.
In the past, he says Nissan expected too much from Maxima.
"There was a time in its lifecycle that, because it was our strongest model, we tried to squeeze a lot out of it. When you start getting up around $30,000, you can’t sell 125,000 any more and do it the way we want to do it – without the incentives."
Plus, a reduction in sales will help bolster Maxima’s image as a flagship vehicle. Too many incentives or even too many vehicles injected into the market could denigrate that image. He points out that Nissan is dropping the base GXE trim level and concentrating more on upscale models with Maxima, while letting the 6-cyl. Altima fill the low-end void.
Admittedly, capacity at Smyrna is tight. Moving the Maxima there brings scheduled plant production to 500,000 units annually – the highest level ever (see related story: Maxima Launches at Smyrna; More Changes to Come).
Despite this, there may be room for some upside at the plant – and Connelly does not rule out nudging Maxima sales a bit beyond the 70,000-unit level if the market so demands.
Emil Hassan, Nissan North America senior vice president-manufacturing, quality, procurement and logistics, says production could be hiked as much as 5%, but certainly not back to the 100,000-unit level. Even if the plant could make the leap, suppliers could not.
"We never will say Smyrna is at its physical limit," Hassan says. "As people get our practices down pat, I think we’ll find out that Smyrna can produce more than 500,000. Whether we will or not, I don’t know. But we will never say (we’re at) the maximum limit."
There is room to shift production levels between the two vehicles, and flexibility will be increased in about 18 months, when some Altima output shifts to Nissan’s Canton, MS, facility.
This flexibility is just one of the many advantages of bringing Maxima production from Japan to the U.S., officials say.
"The market is pretty mercurial," Connelly says. "The quicker we can respond to any market conditions, the better."
Not only is response time faster, but sales and inventory objectives now will be more closely aligned, and logistics costs will be reduced.
In the plant, Altima and Maxima share a common metal (body) line and paint line. The two also have plenty of suppliers and parts in common, although Nissan is tappingCorp. for interior trim pieces exclusive to Maxima.
As with the Altima, there are two modules used on Maxima: front end and instrument panel. Nissan also is increasing use of sequential parts delivery – a process begun with the ’02 Altima and slated to get an extensive workout at Canton once it is up and running this spring. In Smyrna, some 25 commodities arrive at the Maxima line in sequence, resulting in what officials say is a significant reduction in inventory.
Local production of the Maxima, which only will be sold in North America, also takes currency fluctuation out of the business equation for Nissan.
"We’ve worked very hard to create a business plan and we’d like to be in control of our own destiny," Connelly says. "And when you throw currency in there, you don’t have any control."