The Biggest (But Mostly Untold) Story of the US Auto Industry of the Past Decade: How Nissan Almost Doubled Its Market Share To 10%

In the US auto industry, there’s been a lot of upheaval in the past decade or so. GM and Chrysler’s bankruptcy and rebirths. Ford’s brush with the same. And more recently, Tesla’s emergence as the first (apparently) viable new American start-up, with a market cap to rival GM and Ford.

But the biggest single actual change, in terms of market share, has been Nissan’s remarkable growth, and its ability to meet (so far in 2017) a very ambitious goal by CEO Carlos Ghosn in 2011 that Nissan would have a 10% market share by March 31, 2017. That was widely poo-poohed by many, but Nissan has actually surpassed it slightly with a 10.3% market share in the first quarter.

Automotive News recently ran an article on Nissan’s success in meeting its ambitious goal, and it makes for interesting reading. It’s been a combination of factors, but most of all, an aggressive attitude to get there, no matter what it took. Yes, Nissan has had some real product successes, especially in the hot CUV field, where their Rogue has actually been #1 in some recent months. On the other hand, not having much of a truck portfolio has made it all the more remarkable.

Nissan has also been very aggressive with incentives as well as motivating their dealers with various programs to get them to achieve certain goals. These have been controversial with their dealer network: some of them seem to be able to work with Nissan’s programs and achieve considerable success; others hate it, and some have just walked away.

Nissan has also become very big in the fleet sector, taking over the role that GM once played. Undoubtedly, their retail market share is not as big. But any way you look at it, Nissan has made some impressive gains. And it really helps explain why GM, Ford, Toyota and some others have seen their market shares be flat to down: when one competitor is so aggressively gobbling up share, it has to come at someone’s expense. Ford and GM seem quite content to focus on their hugely-profitable trucks, and build cars in more limited quantities to satisfy their actual retail demand, limiting fleet sales. This has boosted profitability at the expense of market share. A different strategy, and one that has left an opening for Nissan. If its costs are low enough, and large volumes reduce unit costs, than presumably it’s working for Nissan.

Update: there is a new article in this morning’s autonews specifically on this subject. Here’s a snippet of it:

Nissan’s presence in the U.S. daily rental fleet business is rising, and Nissan North America Chairman Jose Munoz says that’s a good thing.

“It’s part of the business,” Munoz told Automotive News during a wide-ranging discussion at last week’s New York auto show. “The dollars we get are relevant, so we’re going to continue to be there, even if other companies don’t want to.”

Munoz made the defiant declaration partly in response to criticism from competitors about Nissan North America’s overall market share growth. Detractors have commented — usually in hushed tones — that Nissan’s climb to a 10 percent U.S. market share has relied on increased sales to rental fleets rather than organic demand from retail customers.

Munoz’s message?

Yes, of course it includes fleet sales, he says. And no, there’s nothing wrong with that.

“I guarantee you that every fleet sale we do in the United States is a profitable sale,” he said, or the company wouldn’t do it. “In many regions of the world, the best corporations are also the best in fleet. The important thing is do responsible fleet,” he said.

Note: Nissan is the No. 4 supplier of rental market vehicles in the U.S., behind Fiat Chrysler Automobiles, General Motors and Ford Motor Co.

On the retail side, it appears that Nissan’s strategy has been to stake out a claim in the lower end of the market, and aimed its guns particularly at Hyundai-Kia, willing to take them head-on with comparable, if not even lower prices. And in that regard, it seems to have worked, as Hyundai has stumbled lately and Kia’s growth has basically flat-lined. The days of the Koreans defining the low-end of the market are well gone.

Needless to say, Nissan had to put effort into the product to attain these goals. In terms of design, Nissan has been generally batting quite well; it’s become to be seen as a leader in the CUV arena, and their sedans are doing well too. The Altima has beaten both the Camry and Accord at times in recent years. It’s clearly competitive.

Although the sedan market has been on the down swing generally, there are geographic places where they remain very important, like Southern California. It’s a huge market, and compact sedans are the transportation pod of choice for so many freeway warriors. The Latino market is particularly important there, and Nissan is very big in Mexico. But the cars have to have visual appeal too. The current Sentra sells at twice the level as its dowdy predecessor.

Nissan USA had to virtually re-create itself to even hope to attain the 10% goal. One of the key changes was to increase the number of regions from five to eight, and substantially beef up regional sales and marketing operations.

Unlike Toyota, Nissan has had an exceptionally bumpy ride in the US since the time in the 1960s when Datsun it outsold Toyota. The bumps continued for decades, with inconsistent styling, the name change from Datsun to Nissan, and numerous other missteps. But it would seem that Nissan has gotten its act together, and is firing on all of its cylinders, or batteries.