Jed Connelly Nissan 2006 Keynote Presentation
Good morning and welcome to Farmington Hills. I’d like to start this morning by thanking our hosts here at the Nissan Technical Center and Nissan Design America for opening this beautiful facility to us and letting us interrupt their entire day.
This morning, our goal is to set the stage for the next few years at Nissan... giving you a look at our technology direction, an advanced preview of our new entry-level Nissan sedan and hatchback, and an off-the-record peek of our next generations of Sentra, Altima and Maxima sedans.
But before getting to the hardware, I’d like to give you a brief business update. Six days ago in Tokyo, Carlos Ghosn announced the successful completion of our NISSAN 180 plan. We reached our goal, set three years earlier, of attaining 1 million additional units globally, 8 percent profitability and 0 automotive debt.
Nissan North America played a significant role in attaining these targets. Between FY98 and FY04, our total sales increased 61%, while the total industry moved up just 6.3%. In fiscal year 2004, which ended last April, our U.S. market share was 6%, up from 5.1% the year before.
Also in FY04, Nissan became the sixth manufacturer to sell a million units in a year in the U.S. Of the other five companies that have crossed the million sales milestone, none has ever crossed back.
Through August of this calendar year, we’ve sold more than 742,000 cars and trucks – 650,000 for the Nissan Division and 92,000 for Infiniti. Nissan is up 16.6% over the same period in 2004 and Infiniti is up 7.7%.
Our incentive spending remains at about 60% of industry average and we haven’t had to resort to the brand damaging marketing tactics of the domestics.
We are somewhat concerned, like everyone is, that the surge in “employee” sales may have pulled ahead new vehicle purchases from later in the year.
We’re also watching the effect these discounted sales may be having on used car values. Yet because we haven’t been dependent on incentive-based sales and our residuals remain high, we’re optimistic that any potential fallout will be less for Nissan than some of the rest of the industry.
We’re also concerned about continuing high gas prices and the long-term impact on large trucks and SUVs, but so far, Titan and Armada sales are holding up – each is up more than 20% year to date. After all, there continues to be a need for the hauling, towing and people-carrying capacity of vehicles like Titan and Armada, even if gas prices are high.
And, our new V6-powered Frontier, Pathfinder and Xterra are attracting buyers who need full-size hardware in a mid-size package. Pathfinder, in fact, was up 146% in August versus last year.
Murano is continuing to find an appreciative audience for its utility, style and the smooth performance of its V6/CVT combination.
Murano sales are up more 35%, topping 50,000 units for the first eight months of the year.
We also have strong dealers, who have been critical partners in our growth – and will be in the future. We are about midway through our Nissan dealer facilities upgrade program.
About a quarter of our entire Nissan dealer body have completed their facility upgrades. To date, they have invested more than $750 million and Nissan has contributed $250 million in support so far.
Comparing dealer performance between 2001 and 2004 for Nissan dealers who have completed the upgrade program, sales are up more than 57% at completed Nissan stores compared to a 33% increase at non-upgraded stores.
Market share is a full point higher at upgraded stores, new car gross profit up 4% and parts and service sales up 17%. So you can see, the return on investment is substantial.
In the past four years, our percentage of Nissan exclusive dealerships has grown from about 50% to 70%, and we all know the benefits of exclusivity in building a brand and in satisfying the customer.
In short, we are preparing our dealers and our internal organization to handle the demands of the future today... a future that will continue to place a priority on sustained growth, high profitability and strong return on investment.
Globally, our business plan for the next three years, called NISSAN Value-Up, includes significant international expansion, the introduction of Infiniti as a global luxury brand, and the launch of 28 new or replacement Nissan and Infiniti models worldwide. You’ll see one of these new models in just a moment.
But first, let’s talk briefly about 2006 model year. Following the launch of three totally resigned vehicles in 2005 – the Pathfinder, Frontier and Xterra – the changes to the 2006 Nissan model line are comparatively small.
The popular 350Z gets its first styling update, as well as available RAYS lightweight wheels and standard 300 horsepower for all manual transmission models.
Quest, Altima, Armada and Titan also all add some new features and equipment for 2006, and Murano gets styling updates inside and out. The full details are in the press materials.
The changes, most of which are the direct result of input from our dealers and owners, keep our models fresh and the values high – which we think our customers appreciate.
And while we’re taking a breather from our long string of product introductions of the past few years – it isn’t lasting long.
In fact, it’s time for the next big shift: the car. Following the complete rethinking of our entire truck line up, and our entry into truck and SUV segments Nissan never competed in before, we’re ready to do the same with our cars.
Our new 2007 model year vehicles will set the stage for the rest of the decade, giving us an even more complete and complementary lineup that matches up confidently with any in the industry. And, we’re also entering new segments yet again, with the addition of hybrid and entry-level vehicles.
To give you a preview of what’s ahead, let’s start at the top with our flagship sedan – the Maxima.
For 2007, we’re enhancing the Maxima with a number of changes, most specifically with a significant upgrade of the interior. The interior revisions are as dramatic as the makeover the Altima received for the 2005 model year.
We expect the Maxima will receive a similarly dramatic impact on sales, residuals and customer enthusiasm.
Speaking of Altima, 2007 brings an all-new version. However, with Altima being arguably the most successful new Nissan vehicle in the past decade, we have to be careful with changing its character.
Just as we shifted conventional mid-size sedan character with Altima back in 2002 – we’re shifting again to make a good thing even better... a lot better. And we’ll have a hybrid version as well.
We’ll debut the new Altima at the New York Auto Show next April, but you’ll get to see a sneak preview of the new Altima later in the Design studio.
I think you’ll agree it is nothing short of stunning. In fact, we’re confident the all-new Altima will once again shake up the mid-size sedan category.
And that brings us to the all-new Sentra. Now some of you have heard that the Sentra was originally planned for this year. But, to be honest with you, it wasn’t completely to our liking.
It was a good car, but not the great one it needed to be, so we waited until we could get it 100 percent right. That wasn’t an easy decision, but it’s symbolic of our willingness to make tough choices if it ultimately makes for better products.
The all-new Sentra is certainly better for it – and worth the wait. It’s an awesome vehicle, with more power, more room, and typical of a Nissan, more style.
You’ll hear a lot more about it when it debuts at the North American International Auto Show in January – but we’ll give you a sneak preview later today in the studio.
So, in 2007, we’ll offer an all-new Sentra, a new Altima, and a more maxed-out Maxima.
Our sedan strategy, like our truck plan, is simple: to deliver the promise of SHIFT, with constant improvements to styling, performance and quality in ways that fulfill consumer needs.
And, with the Sentra moving up slightly in size and stature to be more complimentary with our mid-size Altima and flagship Maxima, there’s room for a new entry-level Nissan.
The compact and entry-level segments account for nearly 1.9 million annual sales – and frankly, we want a bigger piece of it.
But, there’s always a danger that low-end vehicles can bring down the image of the rest of your lineup.
With our new entry-level car, we won’t have that problem. It’s a quality product with great design and great engineering… which makes it “Nissan” in every way.
And we call this all-new Nissan... the Versa.
Versa will be offered in both sedan and hatchback versions, which, along with Sentra, gives us an incredible presence in the more price-conscious segments.
And while Versa will be slotted below Sentra in our line, and is “entry-level” in its affordability, it makes no excuses in terms of quality, design, performance, safety, technology or, perhaps most especially, roominess.
In fact, the large interior space was one of the reasons we chose the name “Versa” for the U.S. and Canadian markets.
The name, obviously, relates to “versatility” as Versa offers plenty of room for people and everything they need to support an active lifestyle. In other markets, including Mexico, it is called Tiida.
Our new entry-level car is based on Nissan’s “B” platform, with an extensive number of common parts – which is precisely why we can be profitable with the North American version at a price point where we couldn’t profitably compete before.
In fact, while we haven’t set exact pricing, the Versa sedan and hatchback will be quite affordable, with prices beginning around $12,000.
You’ll hear many more details about the Versa sedan and hatchback later today, but here’s some significant benefits we feel will make our new entry-level car unique.
First, exceptional roominess. Our design and engineering teams found a way to put a big interior in a small car.
I think you’ll be very surprised when you sit in the Versa with how roomy it really is. The interior length, front-to-back, is over six feet long. Rear seat legroom and knee room is tremendous, and Versa has a high quality interior design and craftsmanship.
From the outside, Versa also has an unexpected presence, especially with the hatchback. Our designers didn’t target a specific buyer age range – yet it provides a strong, stylish design that you don’t always find in this class.
And, because it’s a Nissan, Versa offers its own blend of performance and engineering. It has a newly developed 1.8-liter 4-cylinder engine that is powerful, yet delivers excellent fuel economy and is very environmentally friendly.
In addition, the Versa will be available with Nissan’s advanced Xtronic CVT, which puts one of our best technologies in our entry-level vehicle.
CVTs provide several benefits, including a reduction in emissions while improving fuel efficiency and driving feel. In fact, since its introduction, our Xtronic CVT has come standard on every Nissan Murano, and most owners don’t give it a second thought.
Murano is ranked high for drivability in virtually every third-party quality study – and one of the reasons is Murano’s smooth driving feel that comes from its CVT.
We believe there’s no one single best solution to answering today’s environmental and efficiency needs – but Nissan is strongly committed to the benefits and value of CVT technology.
In fact, you’ll see Nissan increasing the use of CVTs on our upcoming vehicles in the U.S.
Before the end of the decade, we plan to sell around 1 million CVT-fitted models worldwide – four times our sales today. That will have the same effect in terms of reducing CO2 emissions as selling 200,000 hybrid electric vehicles.
And there’s one more bit of news I’d like to share about Versa. It will be manufactured at our proven plant in Aguascalientes, Mexico that currently builds Sentra, so we’re assured of high levels of fit and finish.
This plant was established 44 years ago as Nissan’s first overseas assembly plant. Capacity will be increased at the Aguascalientes plant from 200,000 units today to 350,000 units in 2007 – an increase of 70%, most of it attributed Versa and Tiida volume.
To support that increase, approximately 2,000 direct jobs will be created at the plant, as well as 2,000 additional jobs among local suppliers.
So as you can see, Versa is going to have a big impact on all areas of our operations in North America.
Versa provides an entry point into the Nissan experience for buyers that would love to own a Nissan but may have been previously limited by price to used vehicles.
Our goal is to give them the same great buying and ownership experience as every current member of the Nissan family – so that hopefully they will consider Nissan for all their future or additional vehicle needs.
Nissan, with the combination of Versa and the new Sentra, instantly becomes one of the strongest players in the compact and sub-compact segments.
And with the new Altima and the enhancements we’re making to Maxima, Nissan becomes even stronger in every sedan segment.
Following the reinvention of our truck lineup in the past few model years, the revitalization of our car line – our next big shift – is not a bad second act.