noobie

Interesting article on Infiniti hiring execs from Audi and other German brands and investing 10s of billions. Very ambitious plans. Mentions Acura NSX


http://online.wsj.com/article/SB1000...Tabs%3Darticle


Nissan Steers Infiniti Onto New Turf
Auto Maker Staffs Premium Unit With German Executives, Isolates Designers to Avoid Similarities

By YOREE KOH

Associated Press
Infiniti's coming Q50 sedan, shown in April, will have radar-aided braking to maintain a safe distance.

HONG KONG—Nissan Motor Co.'s 7201.TO +3.50% Infiniti brand is looking for a do-over.

Nearly a quarter century after its debut, Nissan wants to remake one of the luxury vehicle market's perpetual underdogs into a global contender on par with the German powerhouses. It is a challenging task. Infiniti has struggled to get equal footing with rival Toyota Motor Corp.'s 7203.TO +1.53% Lexus brand in the U.S. market. Infiniti hasn't fully capitalized on the engineering resources of its parent like Volkswagen AG's VOW3.XE -0.29% Audi, NSU.XE +0.99% or crafted a premium image as alluring as Germany's BMW AG BMW.XE -0.16% and Daimler AG's DAI.XE -0.12% Mercedes-Benz to affluent consumers in China or Europe.

The brand contributed almost nothing to Nissan's group profit last year, Nissan Chief Executive Carlos Ghosn said last month.


Nissan is restarting Infiniti from scratch, backing the brand with "tens of billions of dollars" over the next decade to expand its product lineup, increase production and ramp up marketing. Nissan's ambitious long-term goal is to command 10% of the luxury market eventually, up from about 3% last year.

"This is like a startup company," says Infiniti President Johan de Nysschen. Mr. Ghosn personally wooed Mr. de Nysschen away from Audi last July to lead the Infiniti makeover, just a few months after he moved the brand away from Nissan's working-class roots in Yokohama to Hong Kong—closer to the booming Chinese luxury market. Since then, Mr. de Nysschen has installed a new management team poached from high-end German car makers.

The first goal of Infiniti's new management team is to create a distinctive brand identity. Mr. de Nysschen's goal is to position Infiniti as a more performance and high-tech savvy vehicle than rivals like Lexus as well as underline its mastery in precision.

"You can't be all things to all people," said Mr. de Nysschen, who spent the last decade leading the renaissance of the Audi brand in North America.

Infiniti will get dedicated design teams for its cars. In the past, designers worked on Nissan and Infiniti projects, leaving Infiniti designs often resembling Nissan vehicles.

Nissan's new push to rebuild Infiniti comes as Japanese rivals are redoubling efforts to keep pace with the German brands in the lucrative global luxury vehicle market. Honda Motor Co. 7267.TO +2.22% is reviving its NSX exotic sports car to help spur flagging sales. Toyota President Akio Toyoda is giving Lexus more autonomy and resources to launch a host of new models—six since the beginning of 2012—with edgier designs and bolder performance aimed at younger buyers.

Nissan needs the richer profits from a strong luxury brand, says Koji Endo, an auto analyst at Advanced Research Japan Co. in Tokyo. "Their margins are going to be squeezed from now on. In order to make money, they will definitely have to have a certain volume of high-end vehicles," he says.

Infiniti launched in the U.S. in 1989, just a few months after Lexus. The brand's unusual advertising, which featured images of pussy willow buds and Zen rock gardens, puzzled consumers and dealers alike. Lexus positioned its top of the line LS sedan as a credible Mercedes substitute with better quality and a lower price, and quickly left Infiniti in the dust.

Attempts by U.S.-based Infiniti managers to urge executives at Nissan headquarters in Japan to expand the limited three-model lineup were all "severely rejected," said Yoshito Ishikawa, a manager at Infiniti America from 1997 to 2002.

As Infiniti's profits sank, exacerbated by currency rates and import duties, "the company kind of lost interest in the brand," said Mr. Ishikawa, who is now a general manager overseeing Infiniti's China strategy.

Infiniti's global sales reached 172,000 vehicles last year, but that is paltry compared with the 1.85 million vehicles sold by BMW or the 477,000 Lexuses sold in the same time period.

Infiniti now aims to nearly triple global sales to 500,000 units by March 2017.

As important as the U.S. market is to that goal, China is more critical. Industry executives expect China will soon be the No. 1 luxury vehicle market.

Infiniti will begin building two models in China next year and has started designing specifically to Chinese consumer tastes. A China version of its new Q50 will have a longer wheelbase, the better to make room for chauffeured owners.

Infiniti also will target China's smaller cities, where German brands aren't as well established.

The first test of its rebranding campaign will come this summer, when the Q50 sedan goes on sale in North America. It is a taste of Infiniti's new design direction: a more lightweight feel, a roomier interior and high-tech features like a steer-by-wire system that allows the driver to choose among four different driving experiences ranging from soft and easy to aggressively sporty. A radar-powered braking system can automatically keep the Q50 at a safe distance from cars ahead in traffic.

Mr. de Nysschen says rebuilding Infiniti is a 20-year project that won't necessarily result in luxury segment leadership.

"We would like to position Infiniti as a smaller player, absolutely. We don't want to park an Infiniti in every driveway," he said. "We want to park in the right driveways."

Write to Yoree Koh at yoree.koh@wsj.com

A version of this article appeared June 27, 2013, on page B8 in the U.S. edition of The Wall Street Journal, with the headline: Nissan Steers Infiniti Onto New Turf.

jhr3uva90

Thanks for posting. I'm also a WSJ subscriber, but I missed this article yesterday.

Notice how the article says that Infiniti "contributed almost nothing to Nissan's group profit last year, Nissan Chief Executive Carlos Ghosn said last month." I'm pretty sure that Acura probably contributes more to Honda's profit because of platform sharing with Honda models.

Also, notice how Nissan will invest "tens of billions of dollars" in Infiniti. Compare that with Honda's $1 billion investment in Acura. This is why I don't see any RWD sedans coming from Acura any time soon. I just don't think the "true" luxury segment is Honda's priority.

hondamore

You beat me to it - I was going to post the exact same response to Ghosn's comment.

Rocket_man

Hard to say really. Maybe Acura contributes more than Infiniti, but they have had the development costs of the ZDX and RLX to re-coup and it is safe to say the sales of these two cars will not recover these costs. Profits from the MDX/RDX and sedans are subsidizing these models. The NSX may be another example.

I like the new Q50 but the lack of ventilated seats on a car in its price range is a deal breaker for me. Especially considering the Maxima has ventilated seats. I'm always puzzled why car makers do this. That will keep me away from the Q50, but is not going to drive me to the Maxima. I'm always puzzled why automakers hold these things back so that they can offer them a few models years later. Like the RDX and no rear vents. Certainly they will be offered on the MMC... but why not now??? Dumb IMO.

Colin

I have a theory. Using the RDX air vents as an example. Let's say that you can sell 4000 cars per month without rear air vents, how many more will you sell in 2013 with the addition of rear air vents? How many more cars can you make?

Since the manufacturer knows that they need to add something at MMC, if they included the vents from the start, and didn't sell additional cars because of it, there is no gain. Also, if they already included this, they need to come up with something else at MMC. In this scenario, it is not the cost of the widget itself that holds them back, rather the cost of the "next" widget they need to come up with. (not sure if this rambling made any sense?)

jhr3uva90

Good point!

Regarding the ZDX, it was basically an MDX under the hood. It didn't need to sell THAT many, but the ZDX was such a failure that it didn't even meet Acura's minimum.

Regarding the RL (and by extension, the RLX): the RL was meant so be sold around the world, unlike the ZDX which was primarily for North America (with a little bit of China and Russia thrown in). I'm guessing the RL/Legend sold enough units globally to justify building the RLX. I'm not sure if the RLX will be sold globally like the RL, though.

hondamore

If the RL (+Legend ROW) sold only 50000 units world wide, that is still 2.5 Billion dollars in sales - not chump change. The technology of the engine was shared with the MDX and other models as was the new SH-AWD technology. While not a huge sales success, the RL did it's job.

KeithL

One thing I think Acura needs to start doing is to stop waiting for MMC and to start and tweak things year to year. I look at Infiniti, the M came put in 2010 as an 11. For 13 they added rear sonar sensors, truck sincher, Infiniti Connection and added black headliner to Sport models. I look at Audi and they tend to change up packages and wheel options every year or 2. Acura needs more than some rear vents and they should tweak things like that say in year 2.

Shotgun

Your "ramblings" made perfect sense Colin!

g37guy01

Input from focus groups no doubt. However, ventilated seats is not something I consider a deal maker or deal breaker.

Rocket_man

I'm not sure why Honda/Acura has an obsession with the MMC model. I understand trying to breath a little life into an aging model, but air vents don't really do that. Something more like the TL face lift might, or the TSX in 2006 getting a power boost. But things like rear air vents, passenger seats that move up and down, memory seats, these are things that should be in the car (oh a luxury car) from day one. When a new model comes out it gets a certain reputation, a first impression. Hard to change that. If they want to change up the colors, wheels, tweak the front end, that might make people take a second look at a car, but the lack of something like rear vents already put a tick in the minus column for the car.

When you're in battle with the competition, it doesn't make sense to hold basic luxury features back just so they can be offered a few years later. The competition isn't. They will have already lost sales for 2-3 years because they appear to not keep up with the competition.

Rocket_man

When I lived in the north east I wouldn't have thought of ventilated seats either. But here in the South or those who live in the desert (it was 113 in AZ today) we don't have much need for heated seats. Heated seats have become ubiquitous and are fairly cheap to implement. But how about some love for those of us whose cars are 130+ degrees inside after a few minutes parked in the sun? I never realized I wanted ventilated seats until I tried them. A very nice feature on a hot day.

On the new IS it is part of a $1,000 a la cart premium package which for me is worth it. Acura will likely make me buy the top of the line Advance to get it. BTW my local Lexus now has these on their lot and they look nice. Acura engineers better take a long look at it. Smaller than the TLX I suspect but perfect for me. Although the legacy engine is a minus.

Colin

I think that there is a double standard when it comes to Acura and luxury. Most people seem to feel that because it's "only" and Acura they should include this, that, and the other luxury items. Where as it's okay for [insert "real luxury" brand] to not include these items or include them as an option.

I could be mistaken, but my general impression is that Acura is not (more) obsessed with an MMC upgrades than most other brands on a five or six-year product cycle. Also, I agree that a good first impression is better than a bad first impression. However, I don't believe that either is a guarantee of success or failure. Look no further than the second generation TSX. It was met by huge hatred for being "bloated with numb steering" but is currently one of the most beloved Acura models (judged by the furor over it's impending demise)