That danger became a reality for Nissan this month. A disappointing period for the Japanese manufacturer saw sales of its gas-guzzling trucks and sports utility vehicles head south after petrol prices zoomed in the other direction.
Revenue targets were missed and, for the first time in seven years, the company reported an earnings drop. Exports were down four per cent as demand cooled in the US. Demand slumped at home too, by three per cent, and vehicle production fell for the 18th consecutive month.
A report by Interbrand, published in BusinessWeek this month, confirmed Nissan as a brand on an uneven path.
“A reliance on larger, less fuel- efficient vehicles has hurt Nissan’s environmental credentials,” read the Top 100 Global Brands survey. As a result, Nissan nearly fell out of the rankings altogether, dropping eight places to 98th, after losing one per cent of its value (its brand is valued at US$3 billion).
Not a disastrous drop, no. But while Nissan faltered, its bigger Japanese rivals, Toyota and Honda, powered further ahead.
Toyota’s cleaner hybrid vehicle strategy was, says the report, “leaving rivals trailing”. Toyota’s brand is worth $32 billion, and up 15 per cent on last year. Honda, with its fuel-efficient cars and investments in hybrids and ‘clean’ diesels, was lauded as “the environmentalist’s darling”. Interbrand now values the Honda brand at $18 billion: up six per cent on 2006.
Nissan’s drop is, of course, not as spectacular as other carmakers this year (like Ford, which saw its brand value shrivel by $2 billion). And if any chief executive can reverse its fortunes, it is Carlos Ghosn, who has done it before, when he rescued Nissan via a mutually beneficial alliance with Renault in 1999.
Nissan is still “extremely profitable”, Ghosn has insisted, and will launch more hybrids by 2010.
Then the company will be in a position to shout about its greenness, and give its “shift_the future” tagline a more believable ring to it.
Fact Box...
July 2007: BusinessWeek’s Top 100 Global Brands survey sees Nissan lose one per cent of its brand value. Poor environmental credentials are blamed.
June 2007: Nissan reports first earnings drop in seven years.
October 2006: A long-awaited debut for Nissan’s first hybrid car, the Ultima Hybrid, in the US.
Gavin Coombes, chief executive officer, Asia-Pacific, FutureBrand
Nissan occupies a unique position. It ties its brand to individual driver expression, explicitly referenced in its ‘Shift’ campaign.
Although very much a master brand initiative, Nissan was able to credibly claim this idea due to the strength of its product portfolio.
Nissan cars stand apart due to aggressive styling and an unabashed embrace of the joy of driving. In recent years, this personality has been enhanced by Carlos Ghosn, immortalised in both Western business media and Japanese comic books as a ‘rock star CEO’.
So it is fair to say that the Nissan brand is credible and distinctive. Whether it is sustainable is more difficult to say. If you were to create an car brand from scratch in the current market, you would not choose Nissan as your template.
With climate change moving from theory to reality and even Arnold Schwarzenegger keeping his Hummer in the garage, a brand built on macho gas guzzlers may not be the best long-term option.
The space for a genuinely consumer-conscious car brand will only grow more fertile. Volvo, the only mainstream carmaker that could move easily into this space, is up for sale and faces an uncertain future.
Nissan can take advantage, but only with a shift of its own.
Darren Ho, account director, Ogilvy Singapore
My problem with Nissan is that I’m not clear what it stands for. It has a lacklustre personality. Yes, it has the’Shift’ positioning. But shift what? Toyota and Honda are far better-defined brands. Even the Korean carmakers, such as Hyundai, have a clearer platform: they represent value.
The environmental debate isn’t important for Nissan, at least not in Asia — yet. It’s a very US-centric issue. Unfortunately most Asians are still hungry to consume and view hybrid cars as too expensive.
Walk into any Toyota or Honda dealership outside of Japan and the salesmen will ask whether you want a 1.8- or a 2.0-litre engine. Not if you’re looking for a hybrid car, which have only just launched here.
Cleaner diesels aren’t in demand either. Diesels are seen as workhorse vehicles for taxi drivers.
And we shouldn’t forget that Nissan was almost bankrupt not long ago. Carlos Ghosn will be focusing on recovering lost earnings for now. What Nissan needs is an injection of youth. It makes great cars such as the Skyline, which is famous on the ‘drift’ circuit for driving at high speeds sideways around corners. It has huge cult appeal and cars like thse should to be used as halo products to give the brand more bite.
