Infiniti Expects Challenging Drive Into Europe

GENEVA – When Nissan Motor Co. Ltd.’s Infiniti premium brand launches sales in the European Union Oct. 4, it will arrive with a marketing bang and advertising whimper.

“(Nissan CEO) Carlos Ghosn told us to be frugal,” says Claude Hugot, Infiniti spokesman for France and Belgium. “We will have no advertisements.”

Instead, Infiniti will rely on word of mouth and relationship marketing directly to potential customers.

Some 70% of the region has not heard of Infiniti, Bastien Schupp, marketing director for Europe, says in an interview with Ward’s here. Infiniti is counting on there being enough well-heeled customers to support Infiniti’s growth.

Dealers in major cities will get four models at startup. These include the new ’09 FX cross/utility vehicle that recently made its world premier at the auto show here with a 390-hp DOHC 5.0L V-8 engine; the G sedan and coupe; EX small CUV; and later the M sedan.

For the first 18 months, Infiniti will offer only gasoline engines in a segment dominated by diesels, but the FX will get a diesel in spring 2010.

Infiniti is not worried about selling big engines; there always will be customers who want them, executives say. Prices are not settled but likely will range €35,000-€80,000 ($54,000-$123,000).

’09 FX first Infiniti designed for world markets.

Infiniti knows success here will be an uphill battle.

Mercedes-Benz, BMW and Audi brands all have high volume and market recognition in Europe, while Jaguar, Ferrari, Maserati, Aston-Martin, Lamborghini and Bentley already attract customers who want something different.

Two non-European premium brands have been fighting the headwinds for years: Cadillac hardly has made a dent with its small European BLS, but Lexus has delivered 20,000 units after a decade of sales in the EU.

Evidently, 25,000 units is the breakeven point of Infiniti’s business plan. That is Ghosn’s goal for 2013, and Schupp says the Nissan chief has given the brand five years to become profitable here.

Infiniti will differentiate itself by offering both performance and top service, says Schupp. “We will provide a total ownership experience,” with dealerships organized to provide a “prestige hotel-like sales environment.”

As an example, Infiniti will pick up customers in the event of a vehicle breakdown, no matter what car they are driving, and also offer a second session with owners after they take possession of their car, in order to better explain vehicle features.

“We essentially found our customers, when you give them a car, are so excited that all they want to do is drive away,” Schupp says.

Infiniti will start with 20-25 dealers in six European markets. Nine more will be added by January 2009 and an additional six after April. Plans call for the network to grow to about 80 dealers. Dealerships will be exclusive stand-alones and concentrate on metropolitan areas that cover 75% of their potential market.

Volumes will be closer to that of Porsche, Lexus and Aston Martin brands, in the 15,000- to 40,000-unit range.

“It’s a tremendous task,” Schupp says. “Entering Germany with a premium brand is like importing Japanese champagne to France.” While his friends in Europe think his job is exciting, “most of them just smile and say that I’m crazy.”

Infiniti cars initially were designed for the U.S. and until recently that was the only market, except for a trickle of cars to the Middle East and Switzerland, which is not part of the EU. Today, the brand also is sold in Russia, which took 6,000 units last year.

European driving behavior here is far different than in America, and the cars have been adapted for Europe, Schupp says.

Where Americans cruise, Europeans, at least on some stretches of Germany’s autobahn, roll along at more than 125 mph (200 km/h). Schupp says the brakes on the G37 have been beefed up for Europe and have the largest calipers in the segment.

Starting with the ’09 FX, Infiniti models now are being developed as world cars – with a single standard for brakes, for example. Because the European voice is being heard by product development, Infiniti buyers worldwide will benefit, says Schupp.

“Here, the customers have been much more educated by the German competitors.”

There still will be some difference between Infiniti models targeted for Europe and those going to the U.S. Europeans prefer a matte finish on leather seats, for instance, where Americans prefer a shiny finish.

“With such details, it is difficult to find a common line around the world,” says Schupp, “but things like brakes will be the same across the world.”

Additionally, the EX and FX CUVs in Europe will be offered only in 4-wheel drive, where Americans have the choice of a 2-wheel-drive version. The FX gets a 7-speed transmission in Europe and a 5-speed gearbox in the U.S.

Yet, all the planning and preparation, all the market research and psycho-graphic studies regarding Europe only are theory at this point.

“We expect our customers will be younger than the market average,” says Schupp, who believes many of these to be small business owners or independent professionals.

“It’s a great challenge,” he adds. “We have no idea who will really buy these cars in the end.”