Blog: Glenn BrooksWhy the success of the Toyota Aqua should alarm Nissan

Glenn Brooks | 31 July 2012

By all means watch closely what's going on in some big European car markets but don't forget to see the sales booms unfolding elsewhere, I keep telling myself. That's why I've been having thoughts about a small Toyota that's selling up a storm in Japan.

The Aqua, or Prius c in North America (but not Europe), has become a sensation in Japan and is that country's most successful new model launch of recent memory. You can see just how striking its sales performance is, by taking a look at some numbers I've laid out with what I would modestly hope is some useful analysis.

By contrast to Toyota's success at home, Nissan is in all sorts of trouble there. It's just lost its place as the country's number two brand to Honda, and as I suggest in the piece I've linked to in the previous paragraph, Daihatsu is almost certain to push Nissan down into fourth position in July. Could it get worse? Well, on current trends, by year-end, the brand could have been passed by Suzuki too.

Nissan is in trouble in Japan because its management has done the opposite of what the company used to be so good at. Cost-cutting is king but at some point there is no more meat and you reach the bone. Yes, an obsession with engineering and launching multiple models to match Toyota one-for-one is not the answer either - the latter is what drove the company to near bankruptcy late last century.

For what it's worth, I think Nissan would do well to have a long, hard look at its belief in outsourcing what it used to be great at. Here's a question: why is the March (Micra) for Japan no longer built there? Sales of this B-segment hatchback, now an import from Thailand, are running at 17% of the level of the segment leader, Honda's locally-made Fit (Jazz). Here's another one: why is this huge firm, which also happens to be packed full of brilliant engineers, buying in Kei-class minicars from Mitsubishi Motors and Suzuki? 

It seems to me that Nissan is behaving like a company that tries to save money in the short term, at the same time wasting precious management brainpower on a vexation with its share price. Toyota doesn't do this, nor does Honda, nor does Ford, and the last of these was once one of the worst offenders. Luckily for Ford, it saw that under-investment and an obsession with cost-cutting would hasten a course towards ruin: it changed strategy and avoided the bankruptcy that befell two of its US-based rivals.

Nissan is a rich, highly successful company run by clever people. But what's happening to it in Japan right now ought to be triggering deafening alarm bells in the offices of its leaders and in its boardroom.


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