Nissan tripping over itself?
Nissan Infiniti concept
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 and GM.
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 years.”
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 disruption.
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
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
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 Technology Centre.
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
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.
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
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 email@example.com
Natter Nosh and Noggin
The monthly car enthusiasts meeting will
be at Jameson’s Irish Pub on Soi AR next to the Nova Park
development. The car (and bike) enthusiasts meet on the
second Monday of the month, so this time it is Monday (July
10) at Jameson’s at 7 p.m. This is a totally informal
meeting of like minded souls to discuss their pet motoring
(and motorcycling) loves and hates. Bring along any
magazines, photos of old vehicles, old girlfriends or the
latest Maserati Quattroporte (my last supercar).
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
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
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.
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 in January.
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
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.