Nissan's European operations could miss out on much of the automaker's product offensive planned for the next several years.
As part of CEO Carlos Ghosn's plan to turn Nissan around, the automaker will launch 13 new or significantly changed models worldwide in 2002. Nissan will continue with at least seven new products every year for the foreseeable future.
Nissan will replace its entire Japanese product lineup over the next four years. It will also double the US product lineup from nine to 18 vehicles within three years.
But executives said Nissan's European operations must regain profitability before Nissan will extend the new-product flow here. In short, once the redesigned Micra and Primera arrive, that's the end.
'Europe is significantly different, because our priority there is to get back into the black,' said Patrick Pelata, executive vice president for product development.
'We want to be sure the European operations are coming back to profit, and that there is nothing deeply wrong with either the network or the cost structure. Once Europe is back in the black, then we can expand the lineup,' Pelata said.
Nissan will address its need for new products in Europe, starting with gaps in its existing engine lineup. Nissan has been weak in offering diesel engine variants in Europe, Pelata admits.
Nissan plans to add Renault 1.5-liter and 1.9-liter diesels for the Primera and Almera, and offer Nissan's own 2.2-liter diesel on the X-Trail sport-utility.
In addition, Nissan wants to install optional continuously variable transmissions on all engines up to 3.0 liters. Nissan will introduce other technical features such as adaptive cruise control by 2003.
But the cost is modest compared with new product programs.
'We will do the marketing, have more consistent product planning, depressurize our sales network and increase the perception of quality,' Pelata said. 'We betray the quality and durability of our cars by not showing it in the small details. If you do not spend the small money to make the colors match and the grain right, you are destroying the brand.'
Nissan has been disappointed with the low volume of the Tino compact minivan in Europe. But there are no plans to shorten the life cycle of the vehicle, like Nissan did with the Altima sedan in the USA.
'We have no rule in the company that four years or five years is a product cycle,' said Norio Matsumura, Nissan executive vice president of overseas operations. 'It depends how the model is accepted by the market, and profitability is [a] very important [measurement]. If we launch a model in big volumes, but it cannot be sold, we may have to launch a new one in just three years. But then the new model must be well accepted by the market, because it has to cover the previous leftover investment.'
No sports cars?
As part of its regional strategy, Nissan is questioning whether the upcoming 350Z and Skyline GT-R sports cars will be sold in Europe. Nissan has not found a profitable business plan for either in Europe.
Nissan suffers a price disadvantage of $1,000 (E1,100) in Japan and the USA - consumers are willing to pay that much more for a Toyota than a Nissan. The discrepancy is even higher in Europe. So elevating brand status is crucial.
Halo cars would help, but Nissan must stick to Ghosn's edict that all vehicles must make a profit in their respective markets. Since Europe has higher-speed motorways than the USA or Japan, any European 350Z must have superior specifications.
'We want to be positive about the car, but profit is not there,' Pelata said. 'In Europe, the Z has to be as good as the [Porsche] Boxster. To do that, you have to be excellent in braking and handling in the most difficult high-performance market.'
Pelata sees several major obstacles: 'You cannot have too much wind noise [at European motorway speeds], so the door design is not the same. The European safety regulations are not the same. If we put the same 3.5-liter engine in, the European tax system is very tough.
'But if we do a smaller engine, that is additional investment. Plus we have a 10 percent duty that Porsche and Mercedes [don't]. And this is in a [limited] market.'
As for the Skyline, Pelata mentioned 2004 as a sale date in Japan and Europe if the program is approved. But he did not mention when European sales would begin.
J.D.Power-LMC in London agreed with Nissan's strategy.
'They need to get the fundamentals right,' Bedwell said. 'The new Micra and Primera are vastly improved. The Micra should do as well as it did before, if not better, and the Primera is a big step forward.'
He added: 'But Nissan should see what happens with the volume models before bringing the more exotic stuff. It might be too much of a gamble to sell those here now.'