Nissan challenged on two fronts
Detroit — A decision to hold the line on import quotas and the rising yen are just two of the tough challenges facing Japan's No. 2 carmaker. Still, Thomas D. Mignanelli, the new marketing director of Nissan Motor Corporation's sales subsidiary in the United States, expects 1988 to be ``a reasonably good year.''
For the first time in years, Nissan's US passenger car sales declined last year, to 529,154, from 546,896 in 1986.
Combined 1987 car and truck sales totaled 752,000 units, and Mr. Mignanelli expects volume to be roughly the same this year - though he says a variety of factors could lead to another decline - perhaps to as low as 700,000 cars and trucks in 1988.
In a recent interview, Mignanelli indicated that one reason behind any possible sales decline would be a cutback in Japanese new car quotas.
There had been heavy pressure on that country's Ministry of International Trade and Industry (MITI) to order a cut in the so-called Voluntary Restraint Agreement, or VRA, which has for seven years limited the number of cars Japan's automakers could ship to the US.
The current quota is 2.3 million automobiles a year, but such groups as the Ford Motor Company and the United Automobile Workers Union wanted MITI to cut that to as low as 1.7 million vehicles.
Last last week, however, MITI announced that the quota would be held at the 2.3 million level.
While the announcement means no increase in sales, there is a factor that could reduce sales: rising prices as Japanese carmakers respond to the shift in exchange rates.
Since mid-1985, the yen has doubled in value against the dollar, while Nissan and other Japanese carmakers have raised prices in this country by less than a third.
Even as the Japanese slowly raise prices, there is concern that the yen may continue rising. But ``my gut feeling,'' Mignanelli says, ``is that there's a level above which the yen won't go, and I think we've seen that already.''
While car sales could suffer somewhat, Mignanelli expects Nissan to regain some strength in the truck market - the Japanese manufacturer's truck volume was off 20 percent in 1987 - primarily because of so-called ``niche'' sales, or limited production models specifi-cally designed for small though profitable market segments.
Mignanelli acknowledges that competitors, including Ford, have done a better job of identifying and targeting niche segments, and ``we'll have customer pressure to improve our truck performance.''
A sign of Nissan's growing emphasis on its truck operations is the shift in production at the carmaker's only US assembly line, in Smyrna, Tenn. A year ago, it was building roughly two cars for every light truck. Now that ratio has been reversed.
Mignanelli says that Nissan also needs to develop ``niche'' passenger cars. The manufacturer has no new passenger cars coming into the US until 1989, when it introduces updated versions of its Maxima, Stanza, 200 SX, and Z-car models.
Of the major Japanese carmakers operating in the US, many analysts consider Nissan the weakest, and they point to the poor reception given some of the new vehicles over the last several years.
``The years of having demand exceed sales led us to take things for granted,'' Mignanelli admits. ``We didn't do a very good job of launching them right.''
To avert such problems in the future, the company has been restructuring its US marketing operations. Indeed, Mignanelli himself was only recently brought on board after spending 18 years with Ford.
This is an especially critical time for Nissan to get its marketing back on track. Beyond the normal competitive pressures, it is preparing for the impending launch of a brand new luxury division, dubbed Infiniti, which will officially debut at the beginning of the 1989 model year.
With Infiniti, Nissan will be one of three Japanese carmakers to sell high-end products through a separate luxury division. The first was Honda's Acura line. Toyota will also introduce an upscale division next year.
The first Infiniti models will include a full-size four-door model equipped with a V-8 motor, and a 6-cylinder coupe. In 1990, a smaller sedan will be unveiled.
Initially, Infiniti will be represented by 70 US dealers - a number that will eventually reach 300, according to Mignanelli. He expects those dealerships to be profitable within the first year, though on a corporate level it will take Infiniti at least five years to get out of the red.