Nissan 2007 Annual Report Download - page 26

The automotive market in the United States was
a tale of two halves in fiscal 2006. In the first six
months of the year the industry was relatively
healthy, but we lacked new product offerings.
When we launched products in the second half,
the economic environment was not as inviting
as fuel prices started rising and housing starts
slowed. As a consequence, total industry
volume fell rapidly.
As volumes declined, so did the vehicle mix. People
were moving from traditional SUVs to crossover
vehicles and from light trucks to sedans and small
cars. Our sedan lineup performed relatively well,
particularly the cars we launched, but a drop in the
truck segments overshadowed a lot of their success.
Although the U.S. market is still one of the most
vibrant markets in the world, TIV fell to about 16.5
million units last year. This year it’s hovering
between 16 and 16.2 million. In January 2007, we
projected the market would fall to 16 million during
the fiscal year. Unfortunately, to date, we were right.
In two years, the U.S. market will have lost close to a
million units.
The introduction of our new small car, the Versa,
was well timed as fuel prices are climbing. This product
answers the needs of the marketplace, although
admittedly the margins for that segment aren’t as
high as larger cars. Still, it’s better for us to capture
those customers than lose them to somebody else.
The competition in the U.S. market remains
fierce, and that’s reflected by high levels of
incentives and rapid product introductions. Incentives
are a constant in the marketplace now—the only
thing that changes is how fast they’re announced
and how big they are. There was a time during 2006
when some makers, after reducing their prices were
attempting to go without incentives. By the end of
the fiscal year, though, they’d reversed that trend and
were bringing back the incentives again, on top of
the lowered prices, particularly for trucks.
The constant barrage of new products that we’re
planning over the next several years will be the fuel
for our growth in this difficult environment. For the
Nissan Division, we launched the Versa, Sentra and
an all-new Altima sedan. In the summer, we launched
our first-ever coupe version of the Altima. Later in the
year, we will release the Rogue, our new entry in the
midsize crossover segment. Between those two cars,
we’re entering segments that we had no offer in
before. Virtually all those sales should be incremental.
In the second half of fiscal 2006 our sedan sales
were up significantly, driven by the Altima, which is our
Nissan brand volume leader. In the past, the Sentra
covered both the entry-level segment and the compact
car segment. With the introduction of the Versa to the
entry-level market, we elevated the Sentra’s stature to
cover solely the compact car segment.
The Altima coupe is a line extension, and an
exciting one. There are a few other coupes out there,
but none really fulfills the word properly. A coupe
shouldn’t be just a two-door version of the sedan.
Altima will be the first true coupe in that segment. Of
the nine body panels on a vehicle, for example, it only
shares one with the Altima sedan, and we’ve also
shortened the wheelbase. While there’s still a family
resemblance, it’s a dramatic departure from the sedan.
The Rogue is entering the fastest-growing
segment in the market today, and one that so far has
been dominated by a few other models. With fuel
prices so high, some people are migrating from
traditional SUVs to mid-sized crossovers, while
others are going to the small SUVs. This is a real
opportunity to further expand our volume.
On the Infiniti side, we’ll be launching the G37
coupe later in fiscal 2007. This is a replacement vehicle
for a model that was very successful and in fact, the
press coverage has already been very positive.
Nissan Annual Report 2006-2007
24
Building on a Strong Product Plan
in a Shifting Market
DOMINIQUE THORMANN
Senior Vice President
Nissan North America
NORTH AMERICA
»REGIONAL ACTION