Fourth in a 6-part series exploring powertrain strategies for Japanese auto makers.

TOKYO – With the arrival of Carlos Ghosn and his Renault SA management team in 1999, Nissan Motor Co. Ltd. embraced a market-driven approach to all product development, including powertrains.

Under pressure to slash spending until the auto maker reduced its massive debt, priority was given to powertrain technologies with mass-market applicability, then, to gasoline engines with Super Ultra-Low Emissions Vehicle ratings and efficiency-enhancing continuously variable transmissions.

To the back burner went direct-injection gasoline engines and hybrid-electric vehicles.

Nissan was one of the first to market a California Air Resources Board SULEV-rated vehicle, the Sentra CA in early 2000. It was followed later that year in Japan with the Bluebird Sylphy.

As of today, more than 80% of new Nissan gasoline-engine vehicles sold in Japan are SULEVs, some 17 models in total including the Bluebird Sylphy, Skyline sedan, Tiida, Note, Cube and March.

“The next step will be to gradually increase SULEV penetration to 100%, although that will take some time, because it can only come about when models undergo changeovers,” says Yo Usuba, senior vice president in charge of Nissan’s powertrain engineering division.

Meanwhile, Nissan continues to grow its CVT lineup. Teaming with Jatco Corp., its main transmission supplier, the auto maker offers a full range of CVTs for front-wheel-drive and all-wheel-drive vehicles, with both inline 4-cyl. and V-6 engines ranging from 1.0L to 3.5L.

Through a joint development project with Fuji Heavy Industries Ltd., maker of Subaru cars, the supplier now also offers a compact CVT for Japan’s high-volume 0.66L minicars.

Earlier this year, Jatco opened a $300 million CVT plant in Aguascalientes, Mexico. The first vehicles fitted with a CVT manufactured at the plant are Nissan’s Sentra, built nearby at the auto maker’s Aguascalientes plant, and the Altima, produced at Nissan North America Inc. in Smyrna, TN.

The Versa, also produced in Aguascalientes and sold in Mexico, Japan and China as the Tiida, uses a CVT imported from Jatco in Japan.

At present in the U.S., automatic-transmission versions of the Sentra, Altima, Murano and Maxima all use the CVT. The Murano is imported from Japan.

If Jatco’s Mexican plant reaches capacity of 800,000 units this year, the supplier estimates global CVT production will reach 1.8 million units, roughly 40% of total transmission output approaching 4.5 million.

With the November launch of the new-generation Skyline (Infiniti G35 in the U.S.), Nissan phased out its unique toroidal-type CVT for rear-wheel-drive vehicles – a victim of high system cost, according to Jatco.

In powertrain areas originally de-emphasized by Nissan, Usuba says the auto maker will consider reintroducing a direct-injection gasoline engine in the next five years.

Many rivals, including Toyota Motor Corp. and Audi AG, have made DIG technology a linchpin in their gasoline-engine portfolios.

“We stopped producing (DIG engines) because of high catalyst costs,” he says. “However, we still think the technology has potential.”

With the launch of the Altima Hybrid last November, Nissan also reversed course on hybrid-electric vehicles. The model, which is assembled at Nissan’s Smyrna plant, utilizes key components from Toyota suppliers – and specifically, components developed for the Camry Hybrid that was launched last year in Japan at Toyota’s Tsutsumi plant and in the U.S. at Toyota Motor Mfg Inc. in Georgetown, KY.

Included among the Altima Hybrid’s 200-plus imported components: the inverter, nickel-metal-hydride battery module, electronic power steering system, high-voltage wire harness and heating, ventilation and air-conditioning unit.

Analysts see the Altima Hybrid as a stopgap until Nissan develops an HEV of its own, perhaps by 2010 and probably employing a lithium-ion battery pack.

Current Altima Hybrid production in Smyrna is 1,000 units per month or 12,000 projected over the course of the year.

Nissan built its first HEV in 2000, the limited-production Tina Hybrid, which adopted key components, including the car’s inverter, from Hitachi Ltd.

Despite the auto maker’s initial reluctance to enter the HEV market, Usuba believes the segment will grow to more than 10% of global auto demand by 2015.

“When we consider global-warming trends, we must reduce CO2 by another 20% to 30%,” he says, “which means we must raise fuel efficiency by 40%. That is a huge challenge and won’t be possible by focusing solely on IC engine technology. Hybrids, EVs (pure electric vehicles) and other EV-type systems will all be needed.”

As well as diesels.

Thanks to its partnership with Renault, Nissan can count on the French auto maker for most of its diesel powertrain needs. In Europe, for instance, Renault supplies 4-cyl. diesels to more than 10 Nissan models, including the 1.5L Micra and Note and 2.2L Primera and X-Trail.

In a break from tradition, Nissan has turned to Denso Corp., Toyota’s main supplier, for the common-rail diesel fueling system used in the X-Trail and 2.5L Pathfinder.

Usuba is skeptical about prospects for diesel power in China, India and Southeast Asia, the world’s fastest-growing auto markets.

“It is not clear if these emerging markets can manage diesel fuel quality,” he says, “which could work against wider introduction of diesel powerplants.”

The Nissan executive also warns that the steady move to more stringent emission regulations could dampen diesel’s viability.

“To a large extent, emission regulations define engine cost and, by extension, diesel fuel price will be impacted,” Usuba explains. Lower emission standards correlate with higher sulfur content, thus lower fuel prices, he says.

“China already has announced plans to adopt Euro 4 (emissions) standards, in which case heavier vehicles will experience difficulties employing diesel.”

Meanwhile, there is still potential for diesels in India as Euro 3 regulations still are in place, and the government has not yet moved to set a timetable to adopt Euro 4 or Euro 5 regulations, says Usuba.

Elsewhere in Asia, Thailand essentially is a pickup-truck market. “From that standpoint, since all pickup trucks have diesel versions, Thailand is already a diesel market,” he says. “But we do not expect passenger cars, and sedans in particular, to switch to diesel.”

Nissan currently produces nine engine series, both gasoline and diesel, from 1.0L to displacements exceeding 5.0L. In 2004, the auto maker launched the 1.5L HR and 2.0L MR 4-cyl. gasoline engines to replace QG series and part of the QR series.

In Japan, Nissan produces all primary engine families, including the VK V-8 and famous VQ V-6 and QR 4-cyl.

The auto maker produces the QR and VQ engines in Decherd, TN, for the Altima, Maxima, Quest, Pathfinder, Frontier and Xterra and the VK for Titan, Armada and QX56.

Last autumn, Nissan unwrapped a new-generation VQ variant, the 3.5L VQ35HR, that can be installed in both front- and rear-wheel-drive cars. At or near the top of its class for acceleration and fuel economy, the engine debuted in the new Skyline/Infiniti G35.

It also will be installed in the 350Z this spring, while a larger, 3.7L variant already has been unveiled for the G37 Coupe and other Infiniti applications.

To improve fuel economy, Nissan incorporated some 40 new and improved technologies for the VQ35 HR, including iridium spark plugs, early activating air-fuel sensors, and hydrogen-free, carbon-coated valve lifters, which reduce friction by an estimated 40%.

To produce the engine, Nissan opened a new ¥10 million ($8.7 million) machining line at its Iwaki engine plant in Fukushima Prefecture.

Researchers are bullish about the engine’s future – at least for premium cars.

“No one wants a 4-cyl. engine in this (premium) class,” says a Nissan official. At present, Nissan says it is the only auto maker offering a 2.5L V-6 for cars in the Teana class, including the Altima and Maxima.

Like Toyota and Honda, Nissan also is making inroads into flex-fuel vehicles. In 2004, it introduced the Titan FFV, which can run on a blend of up to 85% ethanol and 15% gasoline, better-known as E85.

This year it will market an E85 Armada, and by 2010 management plans to introduce a 100% ethanol-capable vehicle in Brazil. Currently, all Nissan gasoline engines can run on a blend of up to 10% bioethanol.

In advanced-powertrain development, Nissan has joined with United Technologies Corp. to develop a fuel-cell stack for future fuel-cell vehicles.

At the 22nd International Battery, Hybrid and Fuel Cell Electric Vehicle Symposium & Exposition held last October in Yokohama, the auto maker displayed the latest version of the X-Trail FCV.

By adopting a 10,150-psi (700-bar) hydrogen storage tank, the model can run 370 miles (nearly 600 km) on a single charge.

Nissan, with 20 fuel-cell vehicles in operation, completed a 5-year, ¥85 billion ($739 million) development program with Renault last December. Next stage for the auto makers: increasing power density of the stack. Researchers hope to reach 2-kW/liter levels by 2010, up from between 1-1.5 kW/L at present.

Meanwhile, in the lithium-ion battery field, Nissan has achieved power density of 8 kW/kg in its research labs. The current practical level is slightly above 3 kW/kg. That level was achieved on the X-Trail FCV.

Nissan also is working on a super-thin Li-ion battery pack and compact motors to enable all four wheels to operate independently. Both battery and motors were featured on the Pivo, an advanced-technology concept exhibited at the 2005 Tokyo Motor Show.