Assessing the Automakers
When was the last time the auto business was this cutthroat? It's tough out there on the car lots, many of which are choked with acres of sheet metal. This Special Report is devoted to a group of experts' unvarnished appraisals of how six top carmakers are doing, along with a look at two up-and-comers.
"People are hard-pressed to come up with three or four words that tell you why you should buy a Nissan instead of a Honda or a Toyota," says Charlie Hughes, president of Brand Rules and one of the analysts who weighed in for this Special Report.
Despite the unfocused image and a sales slump that reversed a four-year positive trend in market share, Advertising Age's panel gave Nissan North America an overall grade of B- for 2006, a decent showing compared with those of its rivals.
The carmaker also got a B- for its advertising/communications. TBWA/Chiat/Day, Playa del Rey, Calif., handles both the Nissan brand and its upscale sibling Infiniti. Measured media spending decreased 7.9% last year to $943 million, according to TNS Media Intelligence.
Mr. Hughes argues Nissan deserves credit for sticking to its "Shift" tagline, as in "Shift expectations." "In another five years, I think they will have something really powerful," he says.
Recent uptick in sales
But in 2006, it wasn't powerful enough to stop Nissan's sales from slipping 5.3%. Nissan Division's U.S. sales fell 5%; Infiniti fell 1%. Nissan North America trailed Japanese archrival Toyota Motor Sales USA by 1.5 million units in U.S. sales. For first-quarter 2007, Nissan North America sales were up 3.2% to 278,981.
A few factors could distract Nissan as it seeks to regain momentum in 2007. Nissan shocked industry analysts in February by offering buyouts for some of its assembly workers at two plants in Tennessee. The company said last month that that 775 out of 6,200 hourly workers had taken the package, more than twice as many as Nissan predicted.
The Ad Age panelists also expressed concern about the inevitable distractions and loss of experienced workers connected to Nissan closing its headquarters in Southern California and moving to temporary headquarters outside Nashville last year.
A new headquarters is expected to open in mid-2008, but many employees left rather than relocate.
"A cynic would argue this [move] was a good way to reduce head count," says Jeremy Anwyl, president of Edmunds.com.
Amid this changing environment is the continuing urgent need and challenge for Nissan to set its brands apart.
In answer to that challenge, here are a few words Nissan would like consumers to recall: "Next Generation" for Nissan Division and "By Design" for Infiniti.
Those taglines are shorthand for Nissan's way of weaving together ads emphasizing the practical consumer benefits of a bunch of new sedans, one minivan and one crossover sport utility vehicle.
In 2006, Nissan launched the redesigned Quest minivan, Maxima sedan and economy Sentra along with the all-new Versa economy sedan and hatchback. Nissan also launched the redesigned Altima, a standard midrange sedan, with ads that broke in January 2007.
Campaigns for all those new models employ an update on the "Shift" theme. The tagline is now "Shift 2.0."
Courting younger buyers
For anyone who misses the point, the ads often use the "Next Generation" line, which refers to the company and its new products and to the 20-somethings the brand hopes to attract. Michelle Erwin, senior manager-marketing communications, says Nissan Division already does well with younger buyers.
Nissan owners are 46 years old on average -- younger than owners of Hondas or Toyotas, a Nissan spokesman says. He adds that 20% of Nissan owners are 25 to 34 years old -- more than either Honda or Toyota can claim.
"For the next generation of Nissan products, we're thinking of the next generation of Nissan drivers," Ms. Erwin says.
"What we tried to do was -- knowing that Nissan is going to have one of the freshest lineups of sedans in the industry -- one of the challenges was how to link all these together and make a bigger, broader statement," Ms. Erwin says, adding: "Because we had so many new vehicles, we leveraged 'Next Generation' to them to connect them."
Product line shake-up
Infiniti also redesigned a mixed bag of vehicles in 2006: the M luxury sedan; the G35, a sportier sedan; and the FX, a crossover utility vehicle.
Infiniti ads use variations on the "By Design" theme, as in "Safety. By Design" or "Different. By Design" and even "Brave. By Design," all for the FX. For the G35, the line is "Design. Beyond Machine." The M is "Designed to Outperform."
Despite the language of the Infiniti ads and some fairly offbeat executions for Nissan Division, ads for both brands still manage to put a heavy emphasis on concrete consumer benefits, features and technology.
Ad reflects unfortunate reality for some
Ads for the redesigned Sentra caused some buzz, with videos showing comedian Marc Horowitz living in his Sentra for a week. The videos appeared in TV commercials, online and on Mr. Horowitz's website.
He did a workmanlike job of performing simple-to-understand demonstrations of features such as handling, gas mileage, storage space, a hands-free phone and a good audio system, all without coming across as heavy-handed.
The reference to living in the car definitely offended some people, however.
"They're trying to make the point that it's spacious," Mr. Anwyl says. "But in some markets, that would probably resonate in a negative way, because here in L.A., there really are people living in their cars."
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Car mavens sharpen their pencils
The automakers' grades are based on individual assessments offered by automotive analysts Jeremy Anwyl, president of Edmunds.com; Wes Brown, partner at consultant Iceology; Charlie Hughes, president of Brand Rules; Doug Scott, senior VP at GfK Automotive; Art Spinella, president of CNW Marketing Research; and Todd Turner, president of Car Concepts.
The grades refer to the automotive marketers' 2006 performance. The advertising/communications category includes the effectiveness of traditional, measured-media advertising as well as nontraditional marketing, with particular emphasis on the use of new media. Actual-sales grades are based on percentage change in 2006 vs. 2005, but they also take into account the particular challenges each carmaker faces.