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.