Nissan tripping over itself?
The amazing comeback staged by Nissan, under the leadership of
Carlos Ghosn seems to have struck a rough patch. For the last six
years, since charismatic Carlos took over, everything at Nissan was
turning around and beginning to show a healthy bottom line. Last year
he successfully concluded an ambitious three year plan to add 1
million sales globally and post operating profits equal to eight
percent of global revenues, much to the envy of the loss-makers FoMoCo
However, in May, US sales fell 7.3 percent for Nissan North America,
including an 11.7 percent drop at Infiniti Division (their up-market
branch, similar to the Lexus-Toyota).
According to Auto News, the company has scheduled six extra days of
production shutdown at its two big US factories to prevent inventories
from bloating. This month, the Japanese home office has also trimmed
daily production at two factories there, one of which assembles the
Infiniti G35, M45 and Q45 for North America.
Ghosn, who began crafting Nissan’s revival in 1999, brushed aside
criticism that the company was in a slump. “You can’t judge
Nissan’s long term strategy by a three or six month period,” he
said of the current situation. “You have to look at five or six
Speaking to reporters in Nashville this month as he broke ground for a
Nissan headquarters building, Ghosn said that Nissan expected only
stable US sales in the first half of 2006. The second half, he said,
will see a stream of new sales. During the rest of this year, Nissan
says it will launch nine new or redesigned vehicles worldwide.
But until then, Nissan’s new management team will have its hands
full. On July 1, a slate of new senior managers began taking control
in Nashville as the company has relocated its offices from California.
This relocation was ordered by Ghosn to save money, but only 42
percent of the 1,300 staff decided to move, causing considerable
In addition to launching the new products, they must deal with a few
other models that have slipped this year. Nissan’s foray into large
trucks, another leg in Ghosn’s revival of the company, has been
thwarted by falling market demand for vehicles with big engines.
Sales of the full-sized Titan pickup were down 23 percent in May 2006,
compared with May 2005, and the full-sized Armada SUV is down by 30
percent. At the beginning of June there was a 100 day supply inventory
of both trucks.
While Nissan is not enjoying its first downturn for some time (1.8
percent over all), it is not on its own. Chevrolet is down by 8.7
percent and Mitsubishi by 12.3 percent. Ford Motor Co., whose F-series
trucks are the target for the Titan and a newly designed Toyota Tundra
due out this fall, has a 104 day supply of those trucks. The Chrysler
group is sitting on a 125 day supply of its Dodge Ram pickup. Large,
thirsty pick-ups may have had their day in America, it would seem.
In the same vein, Nissan’s U.S. challenges are milder than those in
its home market. Nissan’s Japanese sales plunged 18.5 percent in
April. Ghosn’s COO in Japan, Toshiyuki Shiga, said earlier this
month that the sales dip was a “backlash” from last year’s sales
push. “We totally expected a backlash, but the decline exceeded our
expectations,” he said.
Run-flat tyres that even their manufacturer dislikes
A couple of months ago, I tested a vehicle with the new
run-flat tyres, and I complained bitterly about them. Harsh riding to the point
of discomfort, where the suspension was obviously not coping with the dynamics
set up by the wheel and tyre combination.
Now it seems that it was not just me who complained about the run-flats.
Michelin, one of the manufacturers says that their run-flats, as fitted to BMWs
are heavy, increase fuel consumption and have a negative effect on ride comfort.
This assessment was made by Didier Miraton, the (brave) director of the Michelin
He says carmakers such as BMW pushed for run-flat tyres. “The OEMs (original
equipment manufacturers or carmakers) are motivated by the spare wheel
suppression (removal) for the reason of cost and space. We are, of course,
following them on that path because it makes sense,” Miraton said.
The OEMs say the main reason for the use of run-flats is safety, adding that
customers can drive up to 250 km on a flat at up to 80 km/h. Miraton says the
run-flats it produces for BMW are not perfect. “It is a very heavy tyre, there
is additional cost, fuel consumption is higher because of the very thick
sidewalls, and comfort is hampered.”
He feels the run-flat system used by BMW is not a long-term solution. “We move
forward, we do our best to innovate in that field, but we also see the limit of
this concept.” There is also the draw-back in the fact that the initial tyre
is more expensive, repair is generally not possible after a puncture, and only a
few specialized tyre outlets have the equipment to dismount and mount these
run-flat tyres. “To be frank with you, the issue of service is also quite
substantial,” Miraton said.
It was interesting that last week in the major daily newspapers, BMW was running
full page advertisements, using the run-flats as the main thrust. Perhaps
countering a buyer backlash to Didier Miraton’s words?
Tyremakers including Goodyear, Dunlop, Continental and Bridgestone provide BMW
with run-flat tyres, which are used on 1-Series, 3-Series and 5-Series cars with
17-inch or bigger wheels.
On the other hand, Michelin has developed its own, even more expensive run-flat
tyre called Pax, which uses a roll of rubber around the hub of the tyre to keep
the car running after a puncture. This they claim is a more superior system, but
again at a price that makes it almost prohibitive.
New Camry coming
The 2007 Toyota Camry is on its way, and should be released
on the Thai market in a couple of months. To be thought of as ‘evolution’
rather than ‘revolution’, the new Camry will undoubtedly become one of the
top sellers in this country, just as it has elsewhere. In fact, in the US it is
the country’s best selling car, following its debut at the Detroit Auto Show
The wheelbase has been extended by around 50 mm and the front and rear track
widened, which will all go to make the 2007 Camry even more sure-footed than
before. Leg room has been increased and the seats incline even further (eight
While overseas the car comes with a 2.4 liter VVTi or 3.5 liter V6, or even as a
hybrid, in Thailand I expect that the engines offered will be just the current 2
liter and 2.4 liter models.
The Thai market has been waiting for this new Camry, and in fact this has slowed
sales of the competitors, the Nissan Teana and the Honda Accord. Both of these
are also excellent vehicles, but purchasers are taking a ‘wait and see’
approach before moving.
Fuel misers that don’t save you money
Everywhere in the popular press you will read
articles about alternate fuels and ways to save the (reputedly) dwindling
supplies of fossil fuel, otherwise known as petrol.
The scales seem very heavily tipped towards hybrid technology, with Toyota being
the world leaders along with Honda. Toyota have their Prius and Honda the Civic
hybrid. With both of these cars, the fuel consumption figures are most
impressive. They are also less polluting than their petrol eating brothers, but
that may be where the advantages stop. They may not really be as economical in
real terms, when you consider all the factors involved with running a vehicle.
A new survey has been completed in Australia by the Royal Automobile
Association, in which they took into account all the cost factors such as
initial purchase price, depreciation, interest on the loan taken out to buy the
vehicle, plus fuel, tyres, maintenance, and all over a five year period. The
results were illuminating.
Despite saving on petrol, hybrid models like the Honda Civic hybrid were more
expensive overall, the Royal Automobile Association (RAA) survey showed, and not
just because of a higher purchase price.
Taking into account all the real cost factors, the cost of running a Civic
hybrid over five years was about $178 a week, the RAA said. That was almost $23
more a week than the cost of running a petrol-powered Civic and about $60 more
than the cheapest of the surveyed new cars to run, the Kia Rio.
The cost of running a Toyota Prius hybrid was put at more than $207 a week, well
above the cost of petrol powered small cars like Toyota’s own Corolla at $153.
RAA Technical Services Manager Mark Borlace said that with the Honda Civic
hybrid costing $9,000 more than the petrol Civic, the fuel cost saving it
offered could not be recovered over the five-year period. “Buyers will find
that the main advantage of the Civic hybrid is ecological rather than
economical,” he said. “It saves close to its own weight (930kg) in
greenhouse gas emissions each year compared to the petrol model.”
So that is the real situation. Buy your economizer, but get no real savings for
the bank balance, but assist in saving the planet. Are we prepared to do this?
My friend Stuart Saunders, the dental floss guru, does believe that we are
hell-bent on self destruction with global warming being the global warning over
greenhouse gas emissions, but how many of us really care?
I believe a minimal number of people will be prepared to spend more for initial
purchase of a hybrid, and keep spending more in running costs, to do something
for the future. A future that we will not see in our lifetimes. How many people
are that far forward thinking? The line starts behind Stuart, but I don’t
think it will be a very long one.
Last week I mentioned that in 1919, 41 percent
of the registrations in the UK were a foreign make. I asked which one was it?
This should not have been too difficult, as it was Ford.
So to this week. Exports are very important for the Thai auto industry. In the
first quarter of this year, Thailand waved goodbye to 138,702 vehicles, an
increase of almost 60 percent from the 2005 figures. Major market share went to
Toyota (no prizes for guessing that), but who came second? Clue, they exported
30,531 units in the 2006 first quarter! Further clue – it isn’t Honda.
For the Automania FREE beer this week, be the first correct answer to email