LOS ANGELES - Hot products, not hot deals.
Sounds simple enough. But for Nissan North America Inc., hot deals have been a crutch for several years. Under a back-to-basics program launched last year, Nissan has tried to free itself from relying on incentives. The company wants the appeal of its products to drive sales.
Leading this plan is Nobuo Araki, 55, who took over as Nissan North America's president June 1.
His 'things to do' list, from new Nissan Motor Co. Ltd. COO Carlos Ghosn, looks like this:
Expand the business.
Increase market share.
Improve Nissan's profits.
Under no circumstances do either of the first two at the expense of the third.
The mandate will pressure Nissan's product developers to make sure Nissan vehicles improve their staying power. Araki has pledged that products will be updated every year to keep them fresh.
'I am strongly telling my developers and designers that they need to enhance the products with a little flavor every year. Otherwise, we have to spend big incentive money because the products don't stay interesting,' Araki said in his first interview since becoming president.
That means it's OK that the Pathfinder got a freshening in early 1999, will have a more powerful engine in early 2000 and will be redesigned in fall 2001.
Jeremy Anwyl, president of automotive consulting firm Marketec Systems in Santa Ana, Calif., said Nissan finally recognizes some basic truths of the industry.
'At least now Nissan understands the business is all about the product, and realizes that paying more attention to the marketplace pays off,' Anwyl said. 'From a brand perspective, it serves you better to keep the product fresh than to throw money at it.'
Araki has been part of North American operations since 1988. He has been involved in the sales side with Nissan North America; he helped co-develop minivans with Ford Motor Co. on the Nissan Quest/Mercury Villager program; and he has led Nissan in Mexico.
Now, he is in charge of all of Nissan's sales, finance, manufacturing and product development in North America.
Much of Araki's work will be aimed at continuing efforts to trim Nissan's incentives budget.
While the U.S. industry is spending more on incentives than it did a year ago, Nissan Division incentives are down considerably, including a 40 percent cut from year-ago levels in July, said Art Spinella, president of CNW Marketing/Research in Bandon, Ore.
'Nissan started the year heavy and has come down very quickly since then. They actually spent less than Toyota last month,' Spinella said.
At the same time, Nissan Division sales are up 6.1 percent through July. That is below the industry average but still respectable considering that the old Sentra is all but vacant from showrooms as the Mexico plant ramps up for the 2000 redesign.
'Back-to-basics started last May, and finally we are seeing some results,' Araki said. 'Sales are up, profits are up and inventories are down.'
Carrying the franchise, at least on the image front, is the new Xterra. The rugged sport-utility reflects what Nissan wants future products to be, especially as it attracts customers who have shopped Nissan before, Araki said.
Ghosn wants to give Nissan a uniform global image. That project will take months, but, for now, Araki's marketers are working with some key words that will represent Nissan here: 'smart and excited,' and 'spirited reliability.'
But those images might not work globally; '`spirited reliability' doesn't translate well into either Japanese or French,' Araki noted.
That marketing tack would also steer Nissan in the same direction as second-tier rivals Mazda and Mitsubishi. But Araki feels that Nissan has heritage on its side, a dim but positive memory in consumers' minds that Nissan hopes to jog with a spate of memorable products.
Spinella, meanwhile, warns about what he sees as another aspect of Nissan's heritage: letting success go to its head.
'This happens to Nissan all the time. They get on a hot streak, and then they cool off,' Spinella said. 'They can't get cocky now.'