NISSAN LOOKS TO REDESIGNED ALTIMA TO BOOST SALES

For Nissan dealers the news is generally optimistic. From all indications, the dark days for the Japanese auto company appear to be over. Nissan reported profits of $2.7 billion for the fiscal year ending in March — up from a loss double that amount last year.

The return to profitability can be attributed to cost cutting, but part of the credit is due to a much stronger product line. Nissan plans to introduce 10 new products over the next two years in the U.S.

The new product will be hitting the showrooms not a minute too soon. Light truck and SUV sales through June were down approximately 25,000 from what they were during the same period last year. Nissan hopes to kick start Xterra sales by adding a supercharger to the V-6 engine and giving the front end a more rugged look.

In a first for the compact truck segment, the '02 Frontier Crew Cab will come with a long-bed — 74.6 inches long. Meanwhile, the regular cab version is being retired for lack of profitability.

On the car side, sales through June were up 5,000. Expect those numbers to spike in September when the new 2002 Altima becomes available. The completely redesigned 2002 model will have significantly more power, and a bolder, more distinctive look. Nissan executives expect the vehicle to be a “category buster,” which will shake up what they say has become an increasingly boring midsize sedan market.

For the first time, Altima customers will be able to choose between a V-6, or a 4-cyl. engine. The DOHC 24-valve 3.5L V-6 comes with an impressive 240 hp, more than the new '02 Toyota Camry and '01 Honda Accord.

What will adding a V-6 to the Altima do to Maxima sales? They are both sedans. Nissan executives like to say two different sedans for two different buyers. Yet Nissan must work hard to distinguish the two sedans.

The strategy is to raise the bar for Maxima by pushing it into the near-luxury segment. A complete redesign probably won't be ready until 2005. For now the new '02 model will have a redesigned front, an optional navigational system and significantly more power. The DOHC 24-Valve 3.5 liter engine is the same engine in the '02 Altima, but tweaks to the exhaust system will provide it with 260 hp — 20 more than Altima and almost 40 more than the '01 Maxima.

It's a departure from Nissan's former strategy in the mid-size car market of biting off the bottom with the Altima and off the top with the Maxima. Now Nissan apparently intends to compete head-on with the Altima against the Accord, Camry and Ford Taurus.

Also, Nissan's “raising-the-bar” strategy for Maxima includes managing the sales mix. The company needs to sell more of the higher-line GLE and SE models. In previous years, the base GXE model accounted for approximately 40% of all Maxima sales.

Still, managing the Altima/Maxima relationship will be tricky. So Altima sales won't cannibalize Maxima sales, Nissan will try to keep Altima's V-6 sales to 20% of the mix.

Says Nissan executive Wayne Adair, “We're going to have to control that mix because we need to manage that relationship with Maxima.”

But he adds, “I won't limit dealer orders.”

Considerably different sales projections for the two vehicles in 2002 are also part of managing the relationship. For Maxima, total sales are expected to drop from 110,000 to about 85,000. On the other hand, Altima sales are projected to increase from 130,000 to 190,000.

Meanwhile, Nissan will unveil a new dealer initiative program in September. Details are still being finalized. Mark Perry, director of brand management and research, says the initiative will focus heavily on facility redesign.

He explains. “For the last seven months, we've been conducting research and talking to our dealers to develop a program that protects brand direction, meets the dealers' business needs and satisfies the consumers' needs.”

Dealers need not worry that Nissan will spring a Ford Blue Oval-like certification program on them. Mr. Perry says the initiative will more than likely be rewards-based. “Nissan remains in principle, against programs that result in a take-away system,” he says.

A roll out with five select dealers will begin in late fall. A full-scale implementation will begin in spring of 2002.