nice short article about the Infiniti division turnaround in today's marketplace section of the WSJ. i never realized Infiniti was doing THAT bad...
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INFINITI AND BEYOND

Nissan's Gamble on Infiniti
Pays Off as Growth Surges

By TODD ZAUN
Staff Reporter of THE WALL STREET JOURNAL

TOKYO -- When Carlos Ghosn took control of Nissan Motor Co. more than three years ago, one of his first decisions was whether to kill the company's luxury Infiniti line. The division was slipping further behind competitors such as Toyota Motor Corp.'s Lexus and the luxury German brands. More worrying, 10 years after its 1989 debut, Infiniti still hadn't made a profit -- and Nissan was swimming in debt.

But instead of killing the brand, Mr. Ghosn poured money into new designs to replace half the cars in the Infiniti lineup. Now, his gamble is starting to pay off, as a few new models are turning Infiniti into one of the fastest-growing luxury-car brands in the U.S.

Infiniti's rebound is helping offset an unexpected decline in sales of Nissan vehicles this year, as uncertainty over the war in Iraq makes consumers hesitant to spend. Infiniti's volume grew 23% last year to 87,900 vehicles, and Nissan expects double-digit growth again this year.

The luxury line is also helping Mr. Ghosn keep on track his remarkable three-year turnaround of once-troubled Nissan, which is 44% owned by Renault SA of France. Kurt Sanger, auto analyst at ING Baring Securities in Tokyo, estimates that Infiniti will have accounted for 10% of Nissan's total operating profit in the U.S. for theyear ended March 31, and will make up 20% of U.S. operating profit for the current fiscal year. Nissan earns most of its profit in the U.S. market.


Four years ago, many Infiniti models were little more than gussied-up versions of cheaper Nissans. With Nissan careening toward bankruptcy in the late 1990s, the company couldn't spare the money to develop completely new models. For example, Infiniti's former entry-level sedan, the G20, was essentially a Primera, one of Nissan's European economy cars, with added leather seats. Not surprisingly, many potential car buyers weren't impressed.

When Mr. Ghosn took over Nissan, he immediately began slashing debt and selling off unnecessary assets. Some of the money raised was poured into developing a slew of new cars. Since developing a single new model typically costs hundreds of million dollars, it was a major investment for the company.

To lead the new-vehicle development effort, Mr. Ghosn picked one of his top lieutenants, Patrick Pelata, who was known for devising simple, winning formulas in car design. The 44-year-old Frenchman quickly thought up two rules for Infiniti: Be distinctive and give drivers what they want.

Mr. Pelata's engineers designed a set of basic parts just for Infiniti, using rear-wheel drive -- which most driving enthusiasts say is better suited for luxury and performance models. And Mr. Pelata equipped the cars with more powerful engines than rival brands. "For the U.S., acceleration has to be outstanding," says Mr. Pelata.

Nissan began rolling out the new Infinitis last year, and so far, there are strong signs of success. The hottest seller is the G35, which features vertical headlights that sweep back into the front fenders. And the G35 is the fastest in its class, with a 3.5-liter V6 engine that generates 260 horsepower -- about 15% to 20% more than rivals like Bayerische Motoren Werke AG's BMW 330i and DaimlerChrysler AG's Mercedes-Benz C320.

The model, which starts at $27,100, is selling at an impressive 5,000 units a month. "It's really changing the franchise big time," says Dave Hutton, president of the Miller Infiniti dealership in Los Angeles. He says he sells 75 G35 sedans and coupes per month, compared with the 50-odd Infiniti vehicles he sold in total per month in pre-G35 days.

Mr. Pelata says the success of the G35 has been a big boost to Infiniti's reputation. Still, he acknowledges that Infiniti has a long way to go before it becomes what he calls a "tier-one luxury brand," like Mercedes, Lexus and BMW. Mr. Pelata says Infiniti has a "value gap" -- the difference between what a customer would pay for an Infiniti and the same car if it carried a Lexus or BMW badge -- of as much as $2,000.

Other new Infinitis haven't been as popular as the G35. The $43,000 M45 sedan, launched late last year, and the Q45, at more than $50,000 the priciest Infiniti, aren't selling as well as expected. Mr. Pelata says the Q45 is "not distinctive and differentiated enough" to win over Lexus and BMW drivers. And while Infiniti's volume is growing briskly, it is still small compared with such rivals as the Lexus and Honda Motor Co.'s Acura.

Overall, Infiniti's sales rose 56% to 15,600 vehicles for the first two months of this year -- about half the volume of the luxury leader, Lexus. By comparison, Lexus's sales declined about 7% for the first two months and BMW's sales edged down about 1%.

Infiniti also is closely watching two new luxury sport-utility vehicles, the FX35 and FX45. Early signs are encouraging: It sold more than 2,000 of them in March, on par with monthly sales volumes of the vehicle's main competitors, the BMW X5 and Mercedes-Benz M series.

Nissan managers are cautiously optimistic about Infiniti's long-term performance. Mark McNabb, vice president and general manager of the Infiniti division, says he is pleased with the surge in sales. But he also notes that the quality of service could suffer if dealers aren't prepared for the increase.

"We're still in the midst of turning the corner," says Mr. McNabb. "We've made progress this year, but we have a plan for a longer period of time. And we're not where we need to be yet."

-- Sholnn Freeman and Norihiko Shiouzu contributed to this article.



'03.5 5AS, BS/G, Leather, Sport

 

A good read! Thanks.[img]/w3timages/icons/smile.gif[/img]

<font color=green>GG</font color=green>

 

yeah that was a good read and always good to here that a company has a 56% incress in sales exspecily when it is infiniti. Good job infiniti but what were u thinking witht the m45