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Despite spate of new models, quality issues haunt Nissan


By Paul Lienert / Autos Insider

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The automotive success story of the past three years is Carlos Ghosn's remarkable turnaround of once-beleaguered Japanese automaker Nissan Motor Co.

Or is it?

On a purely financial basis, the turnaround looks pretty convincing. Ghosn and his team of "cost killers" appear to have done a remarkable job of pruning waste, selling off noncore operations, pursuing joint development efforts with French parent Renault SA, and convincing suppliers to slash prices if they want to keep doing business with Nissan.

The result has been fat profits in the past two years -- a dramatic reversal from the steep losses suffered in the late 1990s.

I give full credit to Ghosn and his chief lieutenants, among them Patrick Pelata, the canny French product planning chief, and Shiro Nakamura, the iconoclastic Japanese design boss, for repositioning the company as an edgy, creative, and fast-moving player on the world stage.

Indeed, on its home turf, Nissan has rocketed past Honda Motor Co. to reclaim second place behind Toyota Motor Co.p., and it has been widening the margin month by month.

In Europe, Nissan outsells Honda by more than two to one. In China, Ghosn has announced a broad-based partnership with Dongfeng Motor coupled with an aggressive investment strategy that is aimed at catapulting Nissan past its Japanese competitors into a leadership position in that rapidly emerging market.

What the executive team at Nissan has managed to do, then, is to leverage the company's manufacturing efficiency, engineering prowess, and design creativity to revive a tarnished brand that appeared to be in a death spiral less than five years ago.

Underlying the eye-popping changes in products and plants, of course, is relentless cost-cutting of the sort that made Ghosn practically a household name in the auto industry.

Before we canonize Carlos, however, let's take a closer look at Nissan's track record in North America.

In the past two years, the company has unleashed an absolute onslaught of new products in this market, under the Nissan and Infiniti brands, beginning with the redesigned 2002 Altima in fall 2001.

The Nissan brand has since introduced the all-new Murano crossover vehicle, resurrected the 350Z sports car, and redesigned the Maxima sport sedan. The Infiniti brand has unveiled three new models in that time: the G35 coupe and sedan, the M45 sedan, and the FX crossover vehicle.

All the new products share some common elements, among them bold, edge-of-the-envelope designs and world-class power plants.

This year, the company has continued its product flood, backed by the opening in May of its sprawling $2.4 billion manufacturing complex in Canton, Miss.

The first vehicle off the line in Canton was the paradigm-busting 2004 Quest minivan, which will be followed in October by the equally unsettling Pathfinder Armada -- Nissan's first full-size SUV -- and in December by a companion full-size truck, the Titan. A fourth model, the 2005 Infiniti QX56, arrives next spring as a head-to-head competitor to the Lincoln Navigator and the Cadillac Escalade.

So what's the impact of this product deluge on Nissan's U.S. sales?

Through July, the company's combined tally is up a modest 1.7 percent, a bit of a surprise compared with Honda's 12.8 percent increase in the same period.

In fact, Nissan brand sales were down 2.7 percent in the first seven months, despite the constant cadence of new-model launches. Things are considerably brighter at Infiniti, where seven-month sales jumped 36.7 percent, but the entire increase can be attributed to the strength of the new G35 and the FX.

The debut this fall of the new trucks will help improve the company's sales total for the year, but Nissan has a long way to go to even catch sight of Honda in the United States, let alone have a prayer of overtaking it.

In the meantime, it must still fend off a surging Hyundai Motor Co./Kia Motor Co., which now commands nearly four percent of the U.S. market, compared with Nissan's modest 4.6 percent.

Is Nissan's performance in the Western Hemisphere an anomaly? I don't think so.

The company has been getting great press, thanks in no small part to an outstanding public relations effort in recent years, not to mention Ghosn's own personal charisma and rapport with the media.

Somehow, that goodwill has yet to fully trickle down to the public, where the widespread perception is that Nissan is still a second-tier player -- a perception, I might add, that a close inspection of the products fails to dispel.

I've driven production or prototype versions of every new model from both brands except the QX56. Almost without exception, they have been entertaining to look at and to drive. And almost without exception, the assembly and material quality has fallen short of expectations.

If Nissans look great on the outside, they still tend to fall short on the inside.

The nagging quality concerns are directly related to the issues of supplier costs and manufacturing efficiency, and will not be resolved quickly or easily, as General Motors Corp. discovered to its dismay after the departure of purchasing hatchet man Inaki Lopez.

Quality, then, remains a tightrope that Nissan has to negotiate with extreme care. It especially needs to pump more money into the cabins of its new models, which on the surface seem stylish enough, yet lack the substance of more mundane competitors like Toyota and Honda.

Only then will Nissan and Infiniti products be perceived, by public and press alike, as truly world class -- a perception that should translate into higher sales for both brands.

EXE.UCF10

iTrader: (3)

Good article.
So true.