Industry worried Nissan discounts may lead to US price war

Article by Anita Panait, on June 18, 2013

The auto industry is becoming worried that Nissan Motor Co.’s move to cut prices of its products and boost incentives could lead to a price war between carmakers in the United States. Nissan has trimmed prices of seven models and have hiked incentives in a bid to increase sales as well as market share in the US.

The carmaker’s strategy so far has proven to be effective, as it managed to post a 25-percent surge in sales in the US in May 2013. Nissan posted a 41-percent surge in sales of its Altima family sedan, which price was trimmed by $580. Nissan’s move has also allowed it to increase its US market share by a full point to 7.9 percent in May 2013. While Nissan’s sales and market share gain is something the carmaker is enjoying, the industry is viewing it with concern.

Nissan’s growth is an indication of Japanese carmaker taking advantage of the weakening yen. The currency has depreciated by around 15 percent since Oct. 31, 2012, giving Japanese carmaker an extra $1,500 per car leeway that they could use either to trim prices or include more features in their units, according to Morgan Stanley.

Michelle Krebs, an analyst with auto researcher Edmunds.com told Bloomberg that Nissan's marketing moves seems like “a scorched earth policy” of going for market share and sales volume “at seemingly all costs."

Nissan’s move is also pressuring Detroit to maintain its stance on discounting. In the last decade, Detroit’s collapse was attributed partly to its over-dependence on rebates and price cuts. Forerunners of General Motors and Chrysler Group even had to be bailed out by the federal government, while Ford had to go a self-financed reorganization. [source: automotive news - sub. required]

If you liked the article, share on:

Comments

Login or Create new account to add a comment!

Recommended

Hyundai is making the green vehicle race more competitive by offering three powertrain types -- pure electric (EV), hybrid (EV plus combustion engine) and plug-in hybrid (PHEV) – in one...
by - December 9, 2016
Although specs for the new Renault Megane had already surfaced several weeks ago, we didn’t know that the company has cooked up something new. Aside from the 200hp gasoline, Renault‘s...
by - December 9, 2016
For the first time in fifty-eight years, Infiniti registers its first US-Spec Q60 Coupe in Cuba. American products have not been allowed entry into Cuba for six decades. But it...
by - December 9, 2016
Chevrolet has already given out the pricing for some of its 2018 Equinox models. Not only will the new Equinox be available in both the US and Canada, it is...
by - December 9, 2016
Nearly all details have been set with regards to the upcoming market introduction of the new Jaguar I-Pace. Its production version was recently previewed at the 2016 Los Angeles Auto...
by - December 8, 2016
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries