Nissan’s price-cutting moves helped its U.S. sales surge 25 percent in May. Sales of the Altima family sedan rose 41 percent after Nissan lopped $580 off its price.
NISSAN NORTH AMERICA
SOUTHFIELD, Mich. — Nissan Motor Co. LTD’s take-no-prisoners approach to gaining U.S. market share has the auto industry worried that a price war is brewing that will erode the profit progress made since the recession ravaged auto sales.
After cutting prices on seven models and boosting incentives, Nissan’s U.S. sales surged 25 percent in May, triple the industrywide gain. Sales of its Altima family sedan, which had a $580 price cut, jumped 41 percent, surpassing Ford Motor Co.’s Fusion and closing in on Honda Motor Co. LTD’s Accord. Nissan’s U.S. market share rose a full point to 7.9 percent last month, the biggest gain of any automaker.
Nissan’s sales boom is the first sign of a Japanese automaker taking advantage of the weakening yen that Prime Minister Shinzo Abe has pushed down to improve Japan’s economy. That currency’s 15 percent swoon versus the dollar since Oct. 31 gives Japanese automakers an extra $1,500 per car they can use to cut prices or offer additional features while keeping prices even, according to Morgan Stanley.
Nissan’s marketing moves “strike me as a scorched-earth policy of going for market share and sales volume at seemingly all costs,” said Michelle Krebs, an analyst with auto researcher Edmunds.com.
That’s pressuring Detroit to keep a new-found discipline on discounting. An over-reliance on rebates and price cuts helped lead to Detroit’s downfall last decade, when the predecessors of General Motors Co. and Chrysler Group LLC required government-funded bankruptcies in 2009 and Ford needed a self-financed reorganization.
Detroit has discounts on some models, such as the Chevrolet Volt plug-in hybrid, and offered promos such as free oil changes.
The U.S. automakers are armed with some of their best models in a generation, which may be driving some of the discounting at Nissan, said Jeff Schuster, an analyst with researcher LMC Automotive in Troy.
“So far, Detroit has responded by having more competitive products that are putting some pressure on other brands that just didn’t exist before,” Mr. Schuster said. “Now we’re seeing how the other brands are dealing with it.”
Nissan cut prices from $580 to $4,400 on seven models last month so shoppers using price-search engines can find them online, said Jose Munoz, Nissan’s senior vice president of sales and marketing.