Eyeing a 2007 Turnaround

Nissan North America Inc. has spent most of 2006 in what the Chinese would call “interesting times.”

First, there was the controversial decision by Nissan CEO Carlos Ghosn to move the North American headquarters from Los Angeles to Nashville — to the consternation of much of its staff. Critics say the strategy was aimed more at cutting costs than fostering a warmer Midwestern image.

Then there was the media circus following Ghosn's interest in adding General Motors Corp. to the Renault-Nissan Alliance. Meanwhile, Nissan has taken such a beating in sales this year it looks like it barely fits with the rising vanguard of Asian vehicle producers in the U.S. Nissan expects sales to turn around in 2007.

Even so, a product lineup heavy in trucks and light on new passenger car models hurt Nissan badly this year in North America. October was the first month since February Nissan had a year-on-year sales increase.

Despite October, Nissan's U.S. sales were down 6.3% to 851,644 units vs. the first 10 months of 2005. The Nissan brand was off 5.2% from prior-year; sales for its Infiniti luxury brand were down 13.7%.

In 2007, Nissan is looking for the redesigned versions of its best-selling cars, the compact Sentra and midsize Altima, and the Infiniti G35, to pull it out of its nearly year-long slump.

“As we look at next year, we will have a full year of those products, and we expect to be up year-over-year,” Brad Bradshaw, senior vice president-sales and marketing, tells Ward's.

Things are looking up as Nissan's new Versa subcompact has added 14,573 units this year and is in short supply.

As Nissan settles in to temporary digs in downtown Nashville (a permanent suburban headquarters in Cool Springs will be ready in 2008), Bradshaw insists the cross-country move went smoothly.

Nissan says it was able to retain 42% of its Los Angeles-based staff. Top-level retention was greater, with 80% of senior executives making the move, although the auto maker lost two top execs, Jed Connelly, whom Bradshaw replaced, and Jack Collins, NNA's senior vice president-product planning.

Dominique Thormann, senior vice president-administration and finance, says some former L.A.-based employees have moved to Dallas, home of Nissan Motor Acceptance Corp., and Farmington Hills, MI, where Nissan has a technical center.

As for the proposed Nissan/Renault/GM alliance, which petered out in early October, Bradshaw says NNA mercifully was left out of the study team, thanks to a directive from Nissan CEO Carlos Ghosn. Ghosn told NNA to remain “focused on your objectives,” Bradshaw says. Those objectives include launching the Altima and G35 and preparing for next year's rollout of an all-new cross/utility vehicle, the Rogue.

Nissan has been absent from the small CUV segment in the U.S., while competitors Toyota Motor Corp. and Honda Motor Co. Ltd. are racking up record sales of their small CUVs.

The segment is growing rapidly, with Ward's AutoForecasts projecting North American small CUV production to grow from 412,918 units this year to 784,628 in 2010.

“(Honda) CR-V, (Toyota) RAV4 (are) all worthy competitors,” Bradshaw says. “And we want to get in there and take a chance to fight it out with them because we think we have a really strong product, and it's going to be well received in the marketplace.”

Nissan is mum on the platform underpinning the Rogue.

Bradshaw says the timing couldn't be better for the vehicle, given the recent market shift away from midsize and fullsize SUVs. He says the buzz generated by the new CR-V, sales of which skyrocketed in October, should help the Rogue, too.

Also due next year from Nissan is the SE-R performance variant of its revamped Sentra and a hybrid-electric version of the Altima, to be sold in just eight U.S. states with strict emissions regulations.

Although Infiniti is mum on a replacement for the marque's flagship sedan, the discontinued Q45, Ward's data shows a new Q is due as an '08 model next year, as is a next-generation Nissan Murano midsize CUV.

Murano sales have been a positive for Nissan this year. Through October, Murano was up 14.1% to 68,930 units from year-ago. Bradshaw says the next-generation Murano will not change drastically in size or shape.

With the Altima Hybrid, due early next year, Nissan will take its first step into the hybrid-electric vehicle arena.

The auto maker says the car won't be incongruous to its performance-oriented model lineup, with 158 hp and fuel-economy ratings of 41/36 mpg city/highway (5.7-6.5 L/100 km).

But Thormann says Nissan must leave no stone unturned when it comes to alternative powertrains.

“Today there is not a single technology that is established as being the technology that will be adapted globally, internationally, or in the U.S.,” he says. “Hybrids are a miniscule part of the market, diesels the same thing. The day you get low-sulfur fuel available everywhere (diesel engine acceptance will grow.)”

Nissan says a small, more fuel-efficient version of its storied VQ V-6 might arrive in the U.S. in the future. In Japan, Nissan sells its Skyline model (Infiniti G35 in the U.S.) with a 2.5L VQ.