What a Surprise
Cooling Down the High End

Nissan a Skeptical Maker of Hybrids

Reuters. In an address to the National Automobile Dealers Association, which opened its annual convention on Saturday, Nissan CEO Carlos Ghosn said that making hybrids makes little business sense because of the high costs involved.

Nissan will begin manufacturing a hybrid version of the Altima in 2006 using technology licensed from Toyota. (Earlier post.)

“They make a nice story, but they’re not a a good business story yet because the value is lower than their costs,” said Nissan Chief Executive Carlos Ghosn.

Ghosn said the [hybrid Altima] was only intended to help Japan’s second-largest automaker comply with strict fuel economy and emissions standards in states like California, not because he expects it to be a money-maker.

In his speech, he noted that only about 88,000 of the 16.9 million light vehicles sold in the United States last year were hybrids, adding that they are still considered niche products and something way outside the automotive mainstream.

He also poured cold water on hydrogen fuel cell vehicles, which many automakers see as the industry’s next big technological breakthrough.

Ghosn, who led Nissan’s dramatic turnaround, is poised to take over as CEO at Renault as well, which would make him the first executive to simultaneously run two automakers. Renault owns 44% of Nissan.

Ghosn may be a reluctant manufacturer of hybrids, but that does not mean that he is down on fuel efficiency. In remarks in 2004, he noted that Nissan may offer its fuel-efficient March and Cube small cars in the US, if higher gasoline prices change consumer behavior. (Earlier post.)

“We’re going to measure feedback coming from the media and from the analysts, and as a function of this we’re going to make our decision,” [Nissan CEO Carlos] Ghosn said in an interview from Sausalito, California. “There is no doubt about it, if the American consumers want more fuel-efficient cars we’re ready for it.“

The March and the Cube are the company’s top-sellers in Japan, with 1.4-liter gasoline engines.

It’s a traditional stance that has some elements of accuracy underpinning it. Small cars are more fuel efficient than large cars. If a buyer sets a priority on fuel efficiency, then the buyer can buy a small car. All true...but that attitude represents a reprise of the auto strategies of the late 70s and early 80s, the time of the last major oil crisis during which small, fuel-efficient Japanese small cars made their first major salient into the US market.

That approach is insufficient for these times—a more fundamental shift is necessary. And ultimately, yes, the consumers make the choices that define the nature of the fleet.

Ghosn may be surprised by the uptake in hybrids, but he is a good businessperson—he has left open the possibility of manufacturing up to 50,000 units, based on demand. (Earlier post.)


Mikhail Capone

With a little luck the Altima hybrid will be quite popular and beneficial (the halo effect) to the whole Nissan brand, so Mr Ghosn will reconsider his position.

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