Nissan aims to make up lost time in China

Updated: 2011-08-18 09:37

By Tian Ying (China Daily)

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Nissan aims to make up lost time in China
A visitor looks at a Nissan Motor Co vehicle on display at the company's showroom in Yokohama, Japan. The automaker plans to quadruple Infiniti's share of the Chinese luxury-auto market within five years.[Photo/China Daily]

Luxury brand Infiniti rushing to grab share of high-end market

BEIJING - Nissan Motor Co plans to quadruple Infiniti's share of the Chinese luxury-auto market within five years as it rushes to make up a "ridiculous" amount of time lost to Volkswagen AG's Audi and Toyota Motor Corp's Lexus.

Chief Executive Officer Carlos Ghosn has set a target of winning at least 8 percent of the luxury segment in the world's largest auto market by 2016. Infiniti has 2 percent at present. Market leader Audi has 34 percent while Lexus has 8 percent, according to industry researcher JD Power & Associates.

Nissan's strategy to boost sales includes doubling the number of Infiniti dealers this year, adding five product lines over five years and airing its first TV commercials in a nation where primetime audiences can exceed 500 million. The company is also considering production in China to eliminate tariffs of 25 percent on imported cars.

"We entered the Chinese mainland market even later than Taiwan and South Korea, and that's very ridiculous to anybody who has a bit of knowledge about the industry," Allen Lu, who left Ferrari SpA to become managing director of Infiniti's China unit last year, said in an interview in Beijing. "But, it's like running a marathon - you can't tell who will win after just 10 kilometers."

Nissan, Japan's second-largest automaker, aims to more than triple worldwide Infiniti sales to 500,000 a year by March 2017, taking about 10 percent of the global luxury-car market. China became Infiniti's second-biggest market after the United States last year, according to Lu. The brand isn't sold in Japan.

"We have good momentum in China and we should continue," Ghosn said last month in Beijing, where Nissan unveiled its mid-term China business plan.

Infiniti trails Audi, Munich-based Bayerische Motoren Werke AG and Daimler AG's Mercedes-Benz in China. BMW has a 22 percent share of the luxury-car market and Stuttgart-based Mercedes has 14 percent, according to JD Power.

Infiniti's China sales were 11,513 last year, doubling from the year before, though still only 5 percent of Audi's. Lexus sales rose more than 55 percent to 52,933 units in 2010, according to Toyota, Japan's largest automaker.

Audi also ranked first in a new-vehicle sales satisfaction survey released on Aug 15 by JD Power. Nissan's Chinese venture Dongfeng Motor Co came second. The survey was based on responses from 11,496 owners and covered 57 passenger-vehicle brands.

"The real challenge for Infiniti is to get on the consideration list for luxury-auto shoppers in China," said Bill Russo, a senior adviser at consulting company Booz & Co in Beijing.

China has more than 1.1 million millionaires and an economy that expanded at 9.5 percent in the second quarter, so "it should be possible for Infiniti to carve out a piece of this expanding pie", he said.

Toyota declined to comment on the challenge posed by Infiniti, saying in an e-mail that "we respect all competitors".

Honda Motor Co, Japan's third-largest automaker, is preparing several new Acura luxury models for the US and Chinese markets, Chief Financial Officer Fumihiko Ike said in June.

Infiniti got a late start in China, entering the market in 2007, about three years after Lexus opened its first dealerships there and more than a decade after Audi began local production. The two Japanese luxury units don't have production facilities in China, which means customers pay import duties that elevate prices.

The Infiniti M25 sedan starts at 498,000 yuan ($78,000) and a Lexus ES350 costs from 545,000 yuan, according to pricing data compiled by That compares with 355,000 yuan for an Audi A6 and 418,600 yuan for a BMW 5-series, both of which are assembled in China.

"Brand loyalty in China is not strong," Lu said. "Everyone in China made their wealth in the past 20 or 30 years, and when people have all this money and don't know where to spend it, that's a great opportunity."

Infiniti's success may hinge on manufacturing vehicles in the country, said Klaus Paur, China managing director at Synovate Motoresearch.

Ghosn said in June that Nissan plans to make Infiniti cars in either the US or China. Ghosn and Lu declined during separate interviews last month to comment on whether Infinitis will be made in China.

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