Nissan Motor Co.’s move to trim the prices of its vehicle models in the United is being seen by carmakers as a test whether it would result to a price war in the auto industry, according to John Krafcik, chief executive officer of Hyundai Motor America. Nissan managed to increase its US sales by 25 percent in May – triple the industry-wide gain -- after trimming prices of seven models and boosting incentives.
Krafcik remarked that Nissan’s rivals are raring to see whether the Japanese carmaker could make true its vow to cut the incentives. Krafcik remarked that Nissan’s sales in May could not be considered as an indication of whether the carmaker’s price cut and incentive boost was successful or not.
He quipped that while it is only rational that bigger discounts on cars mean higher sales, the question remains whether strong sales could still be posted if the “big rebates go away.”
According to Barclays Plc, Nissan’s price cuts dropped the average price for its vehicle models by around $500 in May. Krafcik remarked that other carmakers are “all watching closely” to see whether Nissan’s average transaction prices drops further.
In an e-mail to Bloomberg, Nissan spokesman Travis Parman said that their data show that overall transaction prices for the re-priced vehicles have risen and incentive spending has fallen. He added that while the strength of Nissan’s new models is driving majority of the sales increases, the price repositioning strategy appears to be complementing the sales run. [source: Bloomberg]