Nissan's marketing pays off, so it spends more

Aggressive incentives and ad spending have helped Nissan North America Inc. rack up a bigger sales gain this year than Asian rivals Toyota, Honda and Hyundai-Kia. Now Nissan plans more of the same.

Al Castignetti, Nissan Division vice president, told dealers last week at a Las Vegas business meeting that the brand decided in July to add $100 million to its national marketing budget to stoke the sales fire. The funds will begin hitting the market this month.

"We dialed back our spending last year, like everybody else, and this year we've been really getting back into the marketing game," Castignetti says, declining to reveal what this year's budget was before the $100 million was added.

In last year's recession, the Japanese automaker cut its U.S. ad budget 42 percent to $690.9 million, down from $1.19 billion in 2008, according to Advertising Age. By comparison, Hyundai-Kia Automotive Group reduced its 2009 budget by 22 percent, from $513 million in 2008 to $402 million last year.

Dealers received the news on the same day that Kelley Blue Book reported that Hyundai has displaced Nissan as the fifth-most-considered brand among vehicle shoppers.

"The success of the Koreans has been well noted lately, but Nissan has really been moving ahead in sales," observes Jack Nerad, Kelley Blue Book market analyst. "They have snuck up kind of quietly."

Nerad believes Nissan is reaping the benefits of what he calls "the return of the value shopper to the marketplace" -- an increase in consumers looking for a low monthly car note.

"It's really a battle between Nissan and Hyundai to win these value shoppers," he says.

Castignetti agrees value shopping is a big factor now.

"A lot of consumers have gone through a philosophical change over the past two years," he says. "Instead of shopping to get the most car they can buy, they're looking for the best price they can get."

In Miami and some other markets, dealers have been offering 39-month leases on Nissan Versas for a $149 a month. The Nissan Altima is leasing for $199 a month. By comparison, Honda has been marketing its competing Accord for $270 a month. Nationally through July, Versa sales are up 54 percent; Altima sales are up 13 percent; and Accord sales are up 16 percent.

Jessica Caldwell, an analyst for Edmunds.com, says Nissan has been pounding out a marketing message of low-price deals. "They've been very aggressive in promoting attractive monthly prices," Caldwell says. "It's helping them distance themselves from the other imports."

Castignetti acknowledges incentives are helping fan the flame. Still, "we're nowhere near our record levels," he says. "We've been very diligent about that. We're below industry average. We're looking for very healthy growth."

He contends that other factors also are playing a role in Nissan's surge this year, including the availability of leasing financing at Nissan dealers.

"Last year at this time, some of our competitors were getting out of leasing," Castignetti says. "Nissan stayed in it. As a result, you've seen a lot of customers coming off lease at GM and Chrysler who still needed to lease and had to go elsewhere. We were able to win some of that business."

He says leasing has held steady at about 20 percent of the Nissan brand's portfolio. But given the rise in sales this year, that represents roughly 18,000 additional leases through the end of July.

Castignetti says Nissan also has benefited from a resurging light-truck business.

"We're doing great in body-on-frame," he says, referring to such products as the compact Frontier pickup, up nearly 50 percent through July, and the full-sized Armada SUV, up 129 percent from a year ago.

"The domestic manufacturers cut back on their production, and Toyota has moved its Sequoia up in price. There are people out there who really need a large SUV. So suddenly, Armada is one of our hottest products of the year," Castignetti says

By comparison, Nissan's Korean competitors, Hyundai and Kia, are not in the pickup or full-sized SUV segments.

At last week's Las Vegas meeting, Castignetti told dealers Nissan expects to move the brand into a new level of sales with additional products over the next two to three years, including the new Juke small crossover and the electric Leaf coming late this year.

He acknowledges that being displaced by Hyundai as the No. 5 brand for shopping consideration hurts Nissan. But he vows to hold off the Korean brand.

"Hyundai has done an admirable job," he concedes. "But with what we have coming over the next couple of years, we'll recapture that."