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How Nissan zoomed to the front of the pack

The Japanese automaker was a perennial also-ran, behind Honda and Toyota. Until now. Nissan is making deft moves just as its rivals stall. Japan's auto industry has been battered by

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Old 08-23-2011, 10:26 PM   #1 (permalink)
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Default How Nissan zoomed to the front of the pack

The Japanese automaker was a perennial also-ran, behind Honda and Toyota. Until now. Nissan is making deft moves just as its rivals stall.



Japan's auto industry has been battered by disasters natural and unnatural unlike this year. A tragic earthquake and a steroidal yen have wreaked havoc on the bottom lines of major firms Honda and Toyota. The exception? Nissan. The perennial third place finisher has proven resilient, gaining market share and garnering acclaim in the U.S. at the expense of its two most celebrated rivals.

So far this year, Nissan's (NSANY) U.S. sales have jumped 12.8% percent ahead of last year, while Honda (HMC) and Toyota (TM) both declined. The Yokohama, Japan-based company has been basking in the spotlight of good publicity thanks to its innovative Leaf electric car. Through July, it has sold just 4,806 units of the avant-garde little model, which goes for about 100 miles on a charge and sells for $34,570 before tax credits. Less well-known -- and much more vital for Nissan's earnings -- is that its Altima mid-size sedan has been outselling Honda's Accord, Chevrolet's (GM) Malibu and Ford's (F) Fusion.

Nissan, perennially bringing up the rear among Japan's top three, has made a series of deft moves over the last year that has propelled it forward as rivals stalled. Since the March 11 earthquake and resulting tsunami, the company has managed to maintain its supply of vehicles -- unlike competitors. Nissan "got its assembly plants and suppliers up and running sooner," says Rebecca Lindland, an analyst for IHS/Global Insight in Lexington, Massachusetts. "Honda had taken the precaution of using more than one first-tier supplier. But that didn't work out because often both sources were hit by the same shortage of materials or sub-assemblies."

David Reuter, vice president of communications at Nissan's U.S. operations in Nashville, says that the automaker was forced to scramble to make sure its dealers had enough vehicles to sell. Computer chips, for example, were in short supply due to the quake. Nissan therefore decided to build more units with fewer high-tech features, such as navigation, in order to ensure that as many cars as possible were completed. The automaker also exported engine components from its U.S. plant in Canton, Mississippi to its Iwaki plant in Japan when power shortages prevented some ovens from reaching critical heat, thereby disrupting production.

"Nissan's advantage is monozukuri," Reuter said, a Japanese word that means manufacturing. He speculates that Nissan may have flown under the radar of its main competitors when they concentrated on the threat posed by South Korean producer Hyundai, the hottest ascendant Asian brand of the past few years.

But Nissan's problems haven't all been technical. Marketing has been a longtime weakness. The automaker's vehicles, given their high reliability and top reviews by critics, have undersold in the market. Perceptions have changed steadily during the tenure of Carlos Ghosn, who took over as chief executive officer more than a decade ago when Renault AG bought a major stake in the automaker as part of a rescue effort. Nissan, which had been close to bankruptcy in the late 1990s, gained buzz as a turnaround story, its vehicles benefitting from more creative advertising.

Nissan's relative strength has come at the expense of Honda and Toyota. Recently, the influential magazine Consumer Reports removed Honda's Civic from its recommended list, where it had long been a mainstay. And Toyota has yet to recover from investigations into a sudden-acceleration and quality scandal, which was so mishandled by executives it is destined to become fodder for management text books. (Allegations of serious technical flaws have not proven credible, but the fallout has nevertheless hobbled the company.)

Of course, Nissan can't count on Honda and Toyota floundering forever. Both are financially strong with deep reserves of engineering talent. Toyota is about to release a new Camry, which has underwhelmed early reviewers and no doubt will undergo revision to maintain dominance. "Toyota was running on momentum," says Eddie Alterman, editor-in-chief of Car and Driver. "Nissan is gaining because it's been willing to take some chances." In other words, being the underdog was easy. Maintaining the lead -- that's the hard part.
How Nissan zoomed to the front of the pack - Fortune Tech
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Old 08-24-2011, 12:21 AM   #2 (permalink)
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Old 08-24-2011, 09:56 PM   #3 (permalink)
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Since the March 11 earthquake and resulting tsunami, the company has managed to maintain its supply of vehicles -- unlike competitors. Nissan "got its assembly plants and suppliers up and running sooner," says Rebecca Lindland, an analyst for IHS/Global Insight in Lexington, Massachusetts. "Honda had taken the precaution of using more than one first-tier supplier. But that didn't work out because often both sources were hit by the same shortage of materials or sub-assemblies."

David Reuter, vice president of communications at Nissan's U.S. operations in Nashville, says that the automaker was forced to scramble to make sure its dealers had enough vehicles to sell. Computer chips, for example, were in short supply due to the quake. Nissan therefore decided to build more units with fewer high-tech features, such as navigation, in order to ensure that as many cars as possible were completed. The automaker also exported engine components from its U.S. plant in Canton, Mississippi to its Iwaki plant in Japan when power shortages prevented some ovens from reaching critical heat, thereby disrupting production.

"Nissan's advantage is monozukuri," Reuter said, a Japanese word that means manufacturing. He speculates that Nissan may have flown under the radar of its main competitors when they concentrated on the threat posed by South Korean producer Hyundai, the hottest ascendant Asian brand of the past few years.

How Nissan zoomed to the front of the pack - Fortune Tech
hmm...that's interesting.
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Old 08-25-2011, 08:53 PM   #4 (permalink)
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Old 08-26-2011, 12:13 PM   #5 (permalink)
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Your first sentence says it all. Toyota and Honda have stalled.
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