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With little fanfare, Nissan is defying the odds

Nissan

The 2013 Nissan Pathfinder.

By Paul A. Eisenstein

It won’t take a pathfinder to put Nissan on the right track, although this week’s launch of an all-new Nissan Pathfinder at the North American International Auto Show is a critical piece in the automaker’s product strategy.

As has been frequently reported, 2011 was a tough year for Japanese automakers. Two of the industry giants, Toyota and Honda, reported double-digit sales declines as a result of long-running production cuts caused by that island nation’s disastrous March 11 earthquake and tsunami. But what’s often missed is the fact that Nissan finished the year with a 15 percent increase in annual U.S. sales, even though the automaker struggled with shortages through July.

Al Castignetti, the general manager of the flagship Nissan brand, says that’s just fine as far as he’s concerned.

“The louder you are, the more attention you get” from the competition. But it’s difficult to stay in the shadows when you’re planning a series of product roll-outs like the flashy Pathfinder preview in Detroit. And the carmaker will follow it with a series of new products, including replacements for key midsize models Altima and Sentra later this year.

It’s come as a big surprise to see Nissan doing so well, many analysts admit, although George Peterson, chief of AutoPacific, says it suggests the carmaker has “paid attention to [its] knitting.”

That was particularly apparent in the way it responded to the natural disaster that struck northeast Japan last March.

Within days, Nissan teams were meeting with heavily damaged suppliers and, if necessary, helping make repairs to get parts operations back in service. They also turned to new vendors, if necessary, to ensure a steady supply of parts and components.

So, while Honda and Toyota were still struggling with shortages through the fall, Nissan’s global assembly network was back up to full speed by the end of June, according to Castignetti.

The carmaker benefitted, at least to some degree, from the troubles of its rivals, picking up business from normally loyal Honda and Toyota buyers who didn’t want to wait out the shortages, but who might also have preferred to stick with a Japanese product.

Equally impressive is the fact that the products Nissan had to sell were largely reaching the end of their lifecycle, with the exception of a few models, such as an all-new subcompact Versa sedan. The aging products were at a point at which they might normally be expected to slip on the sales charts.

Instead, says Peterson, Nissan’s products remained largely competitive because the automaker “has been doing a very steady job in marketing.”

It has had to increase incentives a bit -- the givebacks rose 6 percent in December, year-over-year, to an average $2,978 a vehicle, according to tracking firm TrueCar.com. But the increases were not enough to seriously dent margins. In fact, the carmaker largely offset the rebate rise by raising transaction prices – what the typical customer actually pays – about 5 percent over the 12-month period, to an average $28,298.

Nissan’s strong performance in the United States helped buoy Nissan’s global bottom line. While its major Japanese rivals were reporting massive downturns in earnings for the first half of the fiscal year, Nissan reported a relatively minor 12 percent decline and CEO Carlos Ghosn has forecast much better results for the full fiscal year, which will wrap up on March 31.

Mike Cassese / Reuters

Upscale sedans, fuel-efficient electric cars – and old-school muscle cars – make their debuts at the 2012 North American International Auto show.

That’s not to say everything is on track for Nissan. The carmaker continues to struggle with some of its light truck operations, especially the full-size Titan pickup with which it had once hoped to challenge the last remaining stronghold of Detroit. But for the full year the big truck saw another 6.1 percent sales decline, generating sales of just 21,994, or barely 4 percent of the demand for Ford’s best-selling F-Series.

Nissan had hoped to turn things around by partnering with Chrysler to get a replacement for Titan based on the U.S. carmaker’s strong Ram truck, but that deal collapsed after Chrysler’s bankruptcy and subsequent takeover by Fiat. An in-house replacement for the now 7-year-old Ram is still believed to be about two years away.

Nissan also suffered some setbacks on the luxury side, its Infiniti division sliding about 5 percent in 2011. Nonetheless, Infiniti General Manager Ben Poore said he is “very proud of what we could accomplish in the face of that disaster.”

Poore is confident Infiniti can rebound this year by targeting non-traditional luxury buyers with distinctively styled products like the EX and FX crossovers. But the real test will be the upcoming launch of the all-new JX, a 7-passenger crossover-utility that the executive says will “put us in the mainstream.”

Perhaps, but the luxury car market is crowded and increasingly competitive, cautions analyst Peterson. While Nissan is hoping to strike a chord with its midsize Altima and Sentra models, it will be going up against an array of challengers, including the best-selling Toyota Camry – refreshed for 2012 – and the next-generation Honda Accord, which the carmaker previewed with a coupe concept this week in Detroit.

Then there are the U.S. automakers. They collectively gained nearly 2 points of market share in 2011 and are determined to maintain that momentum.

After long ceding the midsize segment to the Japanese, they’re aiming for a solid comeback, Chevrolet getting positive buzz for the new Malibu replacement and Ford winning raves with the over-the-top styling of the new Fusion, which is also on display in Detroit for the first time this year.

But Nissan has shown a resilience of its own this past year that suggests that if an earthquake couldn’t knock it down it won’t be any easier for the competition.

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