Nissan's Pending Up Market Push
The Nissan Motor Company is quietly working on a campaign to
overhaul their car line up. Current models, including the
Maxima, Altima, and Sentra, soon will be transformed into more
luxurious and expensive models while a new car line, the Versa,
is welcomed into the fold and sold as the automaker's
introductory model. So, why this change for Nissan? Will the
automaker's plans succeed or fail? A lot is hinging on this move
by Nissan, perhaps more than meets the eye.
The Nissan motor division has been a good performer in the
highly competitive US auto market. With the transformation of
the make's name from Datsun to Nissan in the early 1980s to the
introduction of a luxury line, Infiniti, in the late 1980s, the
Nissan Motor Company has benefited financially and its customers
have been receptive to the changes. Still, Nissan's line is a
perennial third place finisher among Japanese automakers in the
lucrative U.S. auto market, easily being outperformed and
outsold by Toyota and Honda year in and year out.
The pending changes for Nissan's line up are coming about and
for the following reasons:
1. The Maxima's competition, the Toyota Avalon, was overhauled
for the 2006 model year. The Avalon has shed its frumpy image as
it borrows Lexus styling cues to give it a much more luxurious
and appealing look. An improved interior and more standard
equipment has pushed a fully loaded Avalon into the low to
mid-30s range as well. Nissan's response to Toyota's move is to
"Infinitize" the Maxima starting with the 2007 model year by
giving it a more luxurious edge to compete effectively with the
Avalon.
2. Introduction of the Versa. To fight Toyota's budget minded,
youth friendly Scion division, Nissan will be importing the
Versa -- a 1.8L 4 cylinder powered xA-competing hatchback --
expected to retail at about $12,000. To make way for the new
introductory level car, both the Sentra and Altima get a slight
push up market, not as noticeable as the Maxima's bump up, but
enough to distinguish these two lines from each other and from
the Versa.
Of course, Nissan won't be selling the Maxima, Altima, or Sentra
for less than what you pay for these cars now. In fact, the
Maxima's price may ultimately surge several thousand dollars and
into the range of cars sold by their Infiniti division which
begs the following question: why purchase a Maxima when an
Infiniti G35 could be had for almost the same price?
At the same time, both the Altima and Sentra risk being undercut
price wise by American and Korean manufacturers hungry to carve
out a greater share of the market. Indeed, the all new
Alabama-built Hyundai Sonata should sell for several thousand
dollars less than a comparatively equipped Altima. With
Hyundai's quality levels improving, the Sonata's appeal rises
measurably.
Ultimately, Nissan must keep pace with Toyota and Honda or risk
being marginalized further. With other manufacturers duking it
out, it will be interesting to see if higher prices hold for
Nissan models or whether the Japanese automaker will be forced
to cut prices to win consumers and to hold onto market share.