The automobile industry worldwide is a huge network across the globe offering companies diversified in culture, organization and

technology. However they all have one thing in common, to provide a competitive environment with leading technological solutions induced in their vehicles for ultimate customer satisfaction. Automobiles have become a fragment of our lives. This report focuses on the marketing strategies of numerous companies on the global scenario. It is indeed captivating to watch the game played by these car manufacturing giants on the world stage. There is tremendous amount of capital invested in research, development and design. Not every new car makes it to the finish line by pleasing the customers, but again there are legends created without knowledge and renowned only over the passage of time.

The invention of the internal combustion engines triggered the construction of automobiles. The first internal combustion engine was designed by a Swiss inventor named François Isaac de Rivaz in the year 1806. Although designed by François Isaac de Rivaz, it was brought to reality by Etienne Lenoir in 1860. Lenoir, in his patent of 1860, included the provision of a carburettor, so liquid fuel could be substituted for gas,

Fig 1: The design of the first Internal Combustion Engine.

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particularly for mobile purposes in vehicles. However it is ironical to know that at that time, gasoline was considered a waste product. Who might have wondered then that gasoline or what is more popularly known as petroleum would be called liquid gold at a point of time. It was Siegfried Marcus, a German working in Vienna, Austria developed the idea of using gasoline as fuel. In 1870, Siegfried used a simple handcart no seats, steering, or brakes to test his new invention. The result was the world's first vehicle using an internal combustion engine fueled by gasoline The four-stroke engine already had been documented and a patent was applied for in 1862 by the Frenchman Beau de Rochas in a long-winded and rambling pamphlet. Most historians agree that Nikolaus Otto of Germany built the world's first four-stroke engine although his patent was voided. He knew nothing of Beau de Rochas's patent or idea, and invented the concept independently. In fact, he began thinking about the concept in 1861, but abandoned it until the mid-1870s.

Fig 2: Karl Benz

The first automobile powered by the Otto gasoline engine was invented by Karl Benz in the year 1885. Karl Benz, a Germany was granted a patent dated 29 January 1886 in Mannheim for his discovery. Among other items Benz invented are the speed regulation system known also as an accelerator, ignition using sparks from a battery, the spark plug, the clutch, the gear shift, and the water radiator. He built improved versions in 1886 and 1887 and went into production in 1888: the world's first automobile production. ( index.html) 2

In 1886 Gottlieb Daimler fitted a horse carriage with his four-stroke engine. In 1889, he built two vehicles from scratch as automobiles, with several innovations. From 1890 to 1895 about thirty vehicles were built by Daimler and his assistant, Wilhelm Maybach, either at the Daimler works or in the Hotel Hermann, where they set up shop after falling out with their backers. Benz and Daimler, seem to have been unaware of each other's early work and worked independently. Daimler died in 1900. During the First World War, Benz suggested a co-operative effort between the two companies, but it was not until 1926 that the they united under the name of Daimler-Benz with a commitment to remain together under that name until the year 2000. The stage was set and the marathon begun.

Fig 3: Ford T Model, 1927

The first American car with a gasoline internal combustion engine supposedly was designed in 1877 by George Baldwin Selden of Rochester, New York, who applied for a patent on an automobile in 1879. Selden did not build an automobile until 1905, when he was forced to do so, due to a lawsuit threatening the legality of his patent because the subject had never been built. However the person that put America on the world map was Henry Ford. He established the Ford Motor Company.


Te Kwaishinsha Motorcar Works built their first car in 1914 in Azabu-Hiroo District in Tokyo. The new car's name was an acronym of the company's partners' surnames: (DAT)  Kenjiro Den  Rokuro Aoyama  Meitaro Takeuchi The works was renamed to Kwaishinsha Motorcar Co. in 1918, and again, in 1925, to DAT Motorcar Co. DAT Motors built trucks in addition to the DAT and Datson passenger cars. In fact, the vast majority of their output was trucks, as there was almost no consumer market for cars at the time. It was in 1931 when DAT came out with a new smaller car, the first "Datson", meaning "Son of DAT". Later, in 1933 after Nissan took control of DAT Motors, the last syllable of Datson was changed to "sun", because "son" also means "loss" in Japanese, hence the name "Datsun".

Fig 3: Nissan Model 70 Phaeton, 1938



The name "Nissan" was an abbreviation used on the Tokyo stock market for the holding company Nippon Sangyo (Japan Industries or Nippon Industries), founded by Yoshisuke Aikawa in 1928. This company was the famous Nissan "Zaibatsu" (combine) which included Tobata Casting and Hitachi. At this time Nissan controlled foundries and auto parts businesses, but Aikawa did not enter automobile manufacturing until 1933. Nissan would eventually grow to include 74 firms, and to be the fourth-largest combine in Japan during World War II. In 1931, Aikawa purchased controlling(?) shares in DAT Motors, and then in 1933 it merged Tobata Casting's automobile parts department with DAT Motors. As Tobata Casting was a Nissan company, this was the beginning on Nissan's automobile manufacturing. DAT had inherited Kubota's chief designer who was an American, William R. Gorham. This, along with Aikawa's vision-inspiring 1908 visit to Detroit was to greatly affect Nissan's future. Although it had always been Aikawa's intention to use the latest cutting-edge automaking technology from America, it was Gorham that carried out this plan. All the machinery, vehicle designs and engine designs originally came out of the USA. The machinery was imported into Japan by Mitsubishi on behalf of Nissan, which went into the first Yokohama factory to produce Datsuns. The history of Nissan proceeds with more events and happenings which we shall see gradually. Nissan is now the second largest producers of automobiles in Japan. Toyota which holds the first position so far will have a tuff time uphold the name it has acquired. (


Japan has played a robust role in making its aura felt in the world market. The impact of Japanese cars on people world wide is immense. According to surveys taken by various firms, it is found that Americans have more faith in Japanese cars or a German BMW. In the poll, 44 percent said Japan makes the best autos, 29 percent said the United States and 15 percent said Germany.

Fig 4: Lexus LF-A concept car at the 2006 Greater Los Angeles Auto Show

Let us take into consideration the automotive sales in Indonesia from 2003 onwards. Indonesia's automotive industry was in a major boom then. Easily obtainable credit and low interest rates, coupled with a strong increase in consumer lending by banks and an abundance of new, low-priced models assembled locally, had fueled a car boom that showed no signs of slowing down.


Figures from Gaikindo (the Association of Indonesian Automotive Manufacturers) showed that around 483,000 cars were sold in 2004, up 36% on 2003, with sales growing at a pace second only to China. An estimated 620,000 cars were sold, and Malaysia, with some 485,000 cars sold last year. The year 2005, first-quarter car sales increased by 38.5% to 93,627 from 67,595 in 2003 Increased demand could see sales reach 1.3 million cars a year by 2010. International players control 90% of the market, with the rest shared by the US, European and Korean imports, the majority from Europe. Like several other regional markets, Japanese manufacturers have the lion's share of sales. In 2004, Japanese brands (Toyota, Mitsubishi, Suzuki, Isuzu, Daihatsu, Honda, Nissan, Hino and Mazda), either locally assembled or imported, accounted for 81.5% of passenger-car sales. This is just an example of Japanese influence in the automobile industry. Why are Japanese cars sought after? The Japanese have adhered to a proper discipline followed over generations. The cars manufactured in the land of the rising sun are all rounders. These cars are economical or to be more precise provide values for money. Another fact that provides a boost is that Japanese have got the hang of producing high tech engines facing fierce competition from the Germans. The engines manufactured by Toyota, Nissan, Honda, Mitsubishi are crafted with dexterity. The cars provide magnificent efficiency without compromising on the economic platform. They also incorporate peak safety standards and ofcourse Japanese cars are durable and stand strong against the hands of time. Its evident from the fact that a faction in Japan runs a lucrative business on exporting second hand cars to other places in the world. (


The Nissan VQ engines, of V6 configuration, have featured among World's 10 Best Engines for 12 straight years, since the award's inception. A new generation VQ series engine will premiere on the next generation Infiniti G35, the future GT-R and the 2007 Nissan 350Z. There will also be a new generation 2.5VQ 4-cylinder engine that will power the next generation Altima and likely will power the upcoming SPEC-V 2007 Sentra (which will make its debut in October of 2006 followed by the new Altima in November). The VQ engine is a 2.0 L to 4.0 L V6 piston engine from Nissan. It is an aluminum DOHC 4-valve design with aluminum heads. Later versions feature variable valve timing. This engine is widely considered to be the world's benchmark V6 engine for its combination of smoothness, reliability and high power output.
Fig 5: The Nissan VQ Engine with 6

cylinders and 3.5L displacement capacity

The technology aspect, Nissan sketches out an excellent image in the minds of the customers. It has never lagged the race on these grounds. (

Nissan Motor Co., Ltd., announced its new mid-term environmental action plan, Nissan Green Program 2010 (NGP 2010) on the 11th of December 2006. The plan is designed to designed to fulfill Nissan’s environmental philosophy of “symbiosis of people, vehicles and nature” and contribute to a sustainable mobile society. The best part of the deal that any customer would like to possess is a car which will run 100 km in just 3L of gasoline. Sounds impossible right, but that’s the bumper that comes along with this program package. The keys points discussed in the plan are:


• • • • • • •

Incorporating CO2 reduction as one of the key management performance indicators. Launch a “three-liter car” with a target of 2010; a gasoline-fueled car that runs 100km on three liters of fuel. Expand availability of Flexible Fuel Vehicles (FFV) within the next three years. Launch Nissan electric vehicle early in the next decade. Develop Nissan’s original hybrid vehicle targeted for launch in FY2010. Accelerate development of plug-in hybrid technology. Reduce CO2 emissions from global manufacturing plants by 7% compared to 2005 by 2010.

“The Nissan Green Program 2010 provides a transparent view of Nissan’s future commitments to all aspects of environmental management”. This was a statement made by Toshiyuki Shiga, Chief Operating Officer, Nissan Motor Company. “Nissan Green Program 2010 has been designed to address immediate challenges as well as creating the foundation towards a long-term sustainable business model.” Nissan is focused on three core areas related to the environment: • • • Reducing CO2 emissions Reducing exhaust emissions Accelerating recycling efforts.

The Nissan Green Program 2010 is specifically focused on reducing CO2 emissions both from our products as well as from day-to-day corporate activities. In the early part of the next decade, Nissan is planning on launching the next generation fuel cell vehicle with its own in-house developed stack and a battery-powered electric vehicle. At the same time, Nissan is preparing for a new company to develop, produce and market advanced lithium-ion batteries, a key technological component for all electric power trains. In addition, it will accelerate development of plug-in hybrid vehicles. 9

The point to be noted here is that the organization has already chosen the path to be traversed in the future. Even if it has to pave a new one for itself, it has to be done. Customers are highly satisfied with Nissan’s concern on the environment and its ability to provide them with an eco-friendly vehicle. (


Nissan’s presence in India was established in 2004 with the introduction of Nissan XTrail. X-Trail, an SUV was one of the first automatic vehicles to be launched in India. Although priced at a high margin, the car showed good sales figures. The success was owed to the technology behind the SUV. The vehicle’s engine fires up considerable power albeit being a diesel engine. The smoothness and drive comfort beats the aristocratic Mercedes.

Fig 6: The first Nissan launched in India: X-trail

On the 1st of January, the CEO of Nissan, Carlos Ghosn and the CEO of M&M, Anand Mahindra met under a single roof. A MoU(Memorandum of Understanding) was signed between the two companies. It was announced that Nissan was to invest $500 million in constructing a new plant in India. The move was made easier by the already existing M&M and Renault tie up. The strategic alliance with Renault has helped Nissan in the past to produce and market its products in a lucrative manner. 11

The plant would have the potential of manufacture three Lakh cars a year and be operational by 2009, with capacity eventually peaking at five lakh cars by 2012. While making this announcement, Mr Ghosn had said that Nissan was also considering joining this alliance and use the new manufacturing facility for producing its cars for both the Indian and export markets. (He was speaking about the possibility of stepping up the new greenfield plant's capacity to locally produce Nissan cars for India. Marketing Mangement – Philip Kotler To support the Japanese auto maker's production, about 10 parts suppliers from Japan will also start local operations, bringing the group's total investment to around 100 billion yen, said the Japanese business daily, formerly called Nihon Keizai Shimbun, without citing sources. The plant will begin operations in 2009. Production will mostly center on a new compact car with an engine displacement of around 1000cc. About one-third will be sold in India, and the rest exported to Europe and other regions. Nissan is considering whether to participate in a joint project between France's Renault SA (Charts) and Indian utility and tractor maker Mahindra & Mahindra Ltd., which are due to build a plant to assemble 500,000 cars a year from mid-2009. Renault holds 44 percent of Nissan.


2008 is a big year for Nissan Motors. Nissan’s much awaited Skyline GT-R Proto. The former Skylines made the roads beg for mercy. The skyline production was left in abeyance for sometime. This is one of the various marketing strategies that Nissan employs to make a big come back. Many of Nissan’s models such as the Ultima, Bluebird and Skyline were stopped in between. However the research continued on these vehicles. Now they come out into the market with a more aggressive but fresh face.

Fig 7: The Nissan Skyline GT-R also Nicknamed as the Godzilla

The Skyline GTR was nicknamed the Japanese Godzilla after it wasted its competitors without much perspiration. In 1989 Nissan debuted the GT-R to compete in the JTC (Japan Touring Car) Group A racing series. The GT-R was undefeated in its first season. 4 years running the GT-R won the championship in the JTC Group A series, a record of 29 wins out of 29 races.


With sustained dominance, the Skyline was given its own series in 1994 the JGTC,(Japan GT car) series. In 1991 Nurburgring 24 hour endurance race (First participation) Skyline GT-R won the Group N class. At the Spa Francorchamps 24 hour endurance race 1991 the GT-R won overall beating Group A, and Group N1 cars. From 1991 -1997 the Skyline was undefeated in N1 endurance racing in Japan, winning 50 times. It was a pity that Nissan never produced a Skyline GT-R to comply with the United States standards. ( From 1989 -1999 there were 3 models of Skyline GT-R produced. The R32, R33 and the R34, each features the RB26DETT engine, ATTESA E-TS all wheel drive system, and Nissan's Super HICAS four wheel steering system. The engine was a 2.6 liter, dual overhead cam, 24 valve, twin turbo charged, and inter-cooled producing 276 hp @ 6800rpm, capable of handling over 600 hp without internal modifications. The ATTESA E-TS system is an electronically controlled “All wheel drive system”. When the computer senses a loss of traction it automatically sends up to 50 % of the torque to the front wheels. Under normal conditions the car remains rear wheel drive. The R33 and R34 are available with ATTESA E-TS Pro. The Pro system includes a more aggressively controlled torque splitting computer and an electronically controlled limited slip differential in the rear end. The much awaited Skyline GTR Proto is one of its kinds when it comes to styling. Enthusiasts all over are waiting for the leviathan. The GT-R is the first to be released since the demise of the Skyline GT-R. The exact specifications are unknown, it is highly probable that the vehicle will have a twin-turbocharged, 3.7-liter V6 that produces about 450 horsepower and drives all four wheels through a seven-speed sequential gearbox. Also, Nissan claims that the production vehicle will be 80-90% similar to the GT-R Proto. They said that most of the changes for the final production model would be to the front, such as replacing the carbon fiber and possibly the headlights as well. Nissan plans for the release of the car in late 2007 in Japan and Spring 2008 for North America 14

Fig 8: Nissan Skyline GT-R PROTO concept to be launched in 2008

Nissan has long lagged Toyota in sales. But in the world of high-performance racing cars, Japan's second-largest automaker leaves its rival in the dust. That's thanks to the Skyline GT-R, which has been the hot rod of choice in Japan, with nearly 70,000 sold since 1990. In the United States, the car gained an underground following: Paul Walker drove one in the film 2 Fast 2 Furious, and 100 or so have been imported and adapted to meet U.S. safety standards during the past decade. Now, Nissan is preparing a new-generation GTR, to be sold in the United States in 2008. CEO Carlos Ghosn, who's spent the past five years turning Nissan around, is hoping the GT-R will burnish his company's reputation for performance in the States, just as the 1990s version put Nissan on par with Ferrari and Porsche back home. The rollout will start small, with word-of-mouth marketing and a few thousand cars, which people close to the company say will cost about $85,000. A prototype unveiled at 15

the Tokyo Motor Show in 2005 sported a sleek, aerodynamic design; the finished product is expected to preserve many of the car's legendary characteristics, like four-wheel drive and a customizable chassis.

Honda and Toyota bestow fierce competition to Nissan. Carlos Ghosn, CEO of Nissan s doing all he can to elevate the profit margin much above its competitors. During 1998, Honda snatched the title of second largest Japanese car manufacturer from Nissan. Nevertheless after the NRP(Nissan Revival Plan), the company pulled real fast with amazing pace. Now Nissan holds the 2nd position in Japan and is sturdy in its position to continue with the title.

Fig 9: Nissan Rogue, small range SUV targeted to compete with Honda CRV

Honda CRV, the SUV range is a very popular vehicle with customers. The CRV flaunts gorgeous styling and ensures a lovely driving experience. To counter the series Nissan will be realizing the Rogue. Rogue, streamlined body works and a monstrous engine lurking within is conceived to provide massive resistance to the CRV. The engine doesn’t roar but lurches with tremendous power. The SUV guarantees a silky ride and customer satisfaction. (


Is a car company trying too hard to attract younger buyers when it names its new compact crossover after an X-Men character? Well yes it would be, but that's not the case with the 2008 Nissan Rogue, which makes its debut at the 2007 Detroit Auto Show. According to Nissan, the name Rogue was chosen to reflect "its independence-oriented positioning." Not sure what that means, but at least they didn't call it the Wolverine.

Fig 10: Honda CRV

With four SUVs in its lineup already, Nissan doesn't exactly need another people mover. But unlike the Xterra, which is geared toward the occasionally clean, extreme-sports crowd, the Rogue is a more sophisticated compact crossover according to Bill Bosley, general manager of Nissan division. "The Rogue's utility is a little stealthier. All the necessary compartments and storage spaces are there; they just don't scream 'utility' at you," says Bosley.


Seeing it for the first time, we thought the Rogue screamed Hyundai Santa Fe, as it looks nearly identical to its Korean competitor. Measuring 182.9 inches in overall length and riding on a 105.9-inch wheelbase, the Rogue is slightly smaller than the Santa Fe but bigger than the Honda CR-V. Built on the same "C" platform as Nissan's Sentra, the Rogue comes standard with front-wheel drive. Automatic all-wheel drive will be optional. Two trim levels will be offered, but only one engine and transmission combination. Both the base Rogue S and upgraded Rogue SL get a 2.4-liter four-cylinder engine matched to a continuously variable transmission (CVT) with optional paddle shifters. Rated at 170 horsepower and 175 pound-feet of torque, the Rogue's engine will give it more power than most of its four-cylinder competitors and nearly as much as the Santa Fe's V6. It’s fully independent suspension uses coil springs and struts up front, along with an antiroll bar. In back, Nissan used a multilink setup instead of struts to maximize cargo space in the interior. Antilock disc brakes are standard along with stability control, traction control and 16-inch steel wheels. Although the Rogue will start around $20,000 when it goes on sale in the fall of 2007, it will offer a long list of high-tech options for those who aren't afraid to edge closer to the $25K mark. Heated leather seats, keyless ignition and Bluetooth phone connectivity are all on the options list, along with a seven-speaker Bose audio system, multifunction trip computer and xenon headlights.


There's no third-row seat option, but if you need more room for cargo you can get a flatfolding front-passenger seat. There's also a pop-up cargo organizer in back with a washable tray underneath for storing stuff too dirty to put on the carpet. By moving the upscale stuff to the options list, Nissan was able to make side curtain airbags standard for both the front and backseats. The driver and front passenger also get dual-stage front and seat-mounted side airbags. Nissan says it tried to "add a new dimension to the small crossover utility segment" by making the Rogue satisfy both the functional and emotional needs of buyers. Sounds like a line we've heard before, but with ample horsepower, slick styling and plenty of highend options, the Rogue may deliver on the promise better than many of its competitors. If that's what Nissan meant by "independence-oriented positioning," the Rogue will do just fine

Fig 11: The interiors of a Nissan Rogue, designed for the aesthetics’ eyes


The Nissan Altima that was launched recently is one of the happenings around the world. Toyota and Honda pioneered the hybrid technology. Nissan has plans for the long future however is not taking the chances of entering the abyss. It has other issues that concern its stakeholders more. Nevertheless it made sure it is not left out in the market. The result was the Nissan Altima Hybrid. What is a Hybrid car? A Hybrid car is a car that employs gasoline as a fuel but is also powered electrically. For instance the Altima can go up to 40 mph with just electric power. Once the threshold is crossed, the automobile automatically engages power from the internal combustion engine. The car addresses environmental issues far more than other cars. Not only does it reduce considerable pollution but also more economical when taking into regard petrol consumption. Although the initial prices are high, it provides a magnificent experience without compromising on any of the positives. This car would be a big boon to countries like India, were traffic regulates speed to fluctuate between 30-40 mph. Not only will it reduce substantial pollution but the customers will be than happy to refuel the car less often.

Fig 12: The Diagrammatic representation of Hybrid technology in brief


Altima Hybrid The designing of the Altima went through a rigorous process before it was launched in the US. The car is a big hit and continues to top charts on various fronts. With its distinctive exterior design, powerful 4-cylinder engine, sport-oriented suspension and spacious interior, Altima would seem to have it all. Now, Nissan has found one more attribute that completes the Altima's line-up – superb fuel economy from a state-of-the-art hybrid gasoline-electric power train.

Fig 13: The Nissan Altima Hybrid, defining new boundaries in sales

The Altima Hybrid continues Nissan's best-selling car's performance tradition in a new variation – a hybrid power train mates the 2.5-liter 4-cylinder engine and Xtronic™ CVT (Continuously Variable Transmission) with an electric motor and generator that increases fuel economy while maintaining low tailpipe emissions. ( 391c) The Altima Hybrid will be available in eight states. The vehicle has been certified to meet California emissions requirements and will be sold beginning in early 2007 in those states that have adopted California emissions regulations: 21 California, New York,

Massachusetts, Connecticut, Vermont, Rhode Island, Maine and New Jersey. These states are among the strongest markets for hybrid vehicles. Nissan's commitment to the environment takes a different form than might be found at other automakers. While Nissan strives to offer the most advanced fuel-saving technology available, the company also believes that drivers should not have to sacrifice any of the style or performance attributes that remain at the top of the reasons for buying a new Nissan. For that reason, the Altima Hybrid is marked with the same expressive styling as its nonhybrid brethren – inside and out. The engine and suspension in the Altima Hybrid deliver the same spirited performance as its more conventional siblings. The combination of passionate driving and passion for the environment is what makes the Altima Hybrid the standout in its segment. The Altima Hybrid is the latest in a long line of Nissan environmental automotive initiatives: • Nissan was the first automaker to introduce a partial zero emission vehicle (PZEV) with its Sentra CA in 2000. In many areas of California the air leaving the Sentra's tailpipe is cleaner than the air going into the engine. • • Nissan expanded its PZEV offerings to include Altima's 2.5-liter engine in 2005. Nissan's CVT (Continuously Variable Transmission), introduced originally in March 1992 in Japan, is now available to increase fuel efficiency in small, medium and large passenger vehicles. Nissan expects to produce 1 million CVTs annually by the end of fiscal year 2007. • • Nissan introduced the Tino hybrid in Japan in 2000. Nissan brought the Altra EV and Hypermini EV to the U.S. with advanced lithium-ion batteries years before that battery technology caught on with EV experts and enthusiasts. • Nissan offers several flex fuel vehicles (FFV) around the world including the Nissan Titan. 22

Nissan continues to be among the leaders in the development of fuel cell vehicles, recently introducing an X-TRAIL model with a Nissan-designed fuel cell stack. Nissan has been an active partner in the California Fuel Cell Partnership since its early days. (


Line Stretching – Every company’s product line covers a certain part of the total possible range. For example, BMW automobiles are located in the upper price range of the automobile market. Line stretching occurs when a company lengthens its product line beyond its current range. The company can stretch its line downmarket, upmarket or both ways.

Fig 14: Nissan Infinity G35 Coupe

Nissan wanted to move more aggressively into various markets across the globe such as the US. In US customers expected a more luxurious interior with good performance. Customers were wiling to pay more to get better quality and innovative technology. Nissan wanted to start a whole new series of cars to meet the needs. Hence Infinity came into being as its sister company. The infinity series of Nissan was brought into being for providing high performance tagged with lush interiors and comforts. The marketing strategy employed here is the Upmarket Stretch.


Fig 15: The Infinity Triant

The Infinity G35 Sedan has been rated as one of the top 10 cars for the year 2007. Supple ride, balanced, agile handling are elementary when it comes to the G35. You probably associate those lyrics with the BMW 3-series. That’s understandable. Everyone’s been hearing them every year at this time since 1992. But here’s a different tune. The composers of the second-gen G35 were clearly influenced by the themes that have kept the BMW 3s at the top of the hit parade for so long, but they’ve given it subtle Asian phrasing. The finished piece is supple and agile but a shade more aggressive than the German opus. The styling element of the makeover is subtle, but the hardware upgrades are compelling: stiffer structure (by 40 percent), improved steering feel, terrific brakes, a snick-snick sixspeed manual. More power never hurts, and there’s an abundance of that from the revised 3.5-liter V-6: 306 horses, 268 pound-feet of torque, 0-to-60 in the very low five-second bracket. The G35’s visible updates are most apparent within — improved materials, great seats, and a more attractive design. But the most attractive element will be the numbers on the window stickers. We expect the new sedan to cost about the same as a BMW 328i — around $33,000, at least $5000 below the 335i. There’s a tune that’s easy to appreciate.


What is so great about Nissan? Why is Carlos Ghosn regarded as one of the best CEOs of the present? Nissan was the second largest car manufacturer in Japan and continues to retain the position. Nonetheless the company has been running a loss from 1991, for eight consecutive years till 1999. The situation of Nissan in the year 1999 was pathetic. Although they had operations running in several places, the company lacked the ability to convert to profits, reason being unknown. GLOBAL MARKET SHARE 1988/1998
7 % MARKET SHARES 6 5 4 3 2 1 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 CALENDER YR JAN-DEC

In 1999, the scenario worsened when a status meeting was put up. It was confirmed that Nissan was in debt by 20 billion dollars. The company made the report public and went on a hunt for a superior management to take up the company. It was difficult to find prospectors who could turn the 11 digits loss into a profit. Then finally Renault came to its aid. The company bought 44% stake of Nissan. Carlos Ghosn was then designated the CEO of Nissan Motors. The alliance was signed with Renault on the 27th of March. The transaction was nonetheless closed in May.


3.5 3 MILLION UNITS 2.5 2 1.5 1 0.5 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 FISCAL YR APRIL-MARCH

On 18 October 1999, Carlos Ghosn, the CEO of the Nissan Motor Company announced that the company would implement the ‘Nissan Revival Plan’. The main objective of this plan was to downsize the company in Japan to reduce the number of plants and payrolls by 2002, and open alternative factories in mainland China, in Beijing and Hubei province under a joint venture with France’s Renault and China’s Dongfeng Automobile Company. Under this plan, three vehicle assembly plants in Japan - Murayama, Nissan Shatai Kyoto, and Aichi Machine Industry Minato - and two plants producing engines Kurihama and Kyushu - were shut down, while tens of thousands of employees were made redundant.


Fig 16: The CEO of Nissan, Carlos Ghosn

In the Nissan group as a whole, a total of 21,500 employees lost their jobs – 4,000 in the production department, 6,000 in sales management, and 6,500 in sales outlets across the country, while 5,000 workers were displaced as a result of the sales of some businesses. In addition, the number of parts-producing companies trading with Nissan was reduced from 1,145 to less than 600 by the end of 2002. This appeared to be Nissan’s new restructuring plan, yet in fact it was only a copy of the ‘Global Business Innovation’ that was disclosed in May 1998 by Nissan’s then president, Mr Hanawa. The Revival Plan put the Global Business Innovation into a concrete shape. Following is the gist of the Global Business Innovation: • increasing the operating profit of consolidated net sales by five percent, and reducing the consolidated interest-bearing liabilities by one trillion yen in year 2000; • reducing the number of kinds of car body from 25 to 14 by the year 2000, then to 10 kinds by 2002; • downsizing the domestic sales channel from the current four systems to two systems; • rebuilding the business in the US; • rearranging the production lines to increase production efficiency; 28

• reducing overall costs by 400 billion yen by year 2000; • realising a ‘small headquarter’ under the business innovation scheme; • selling its real estate and securities; • reducing the inventory by 250 billion yen by year 2000. In addition, the plan aimed at reducing the number of indirect employees and improving its operational style to enable the company to earn profits from the domestic production of 1.7 million cars. Equipped with the Global Business Innovation, Nissan intended to raise as much capital as possible. However, the plan did not work as the company had expected. Meanwhile, Nissan decided to merge with Renault by receiving 640 billion yen, and invited Mr. Ghosn in as a cost cutter. As a main reason for the Revival Plan, Mr. Ghosn (CEO) raised poor business results pointing out its drop off in global share, production amount, and domestic shares since 1991, as well as the fact that the company incurred losses seven times in the eight years to 1999. So in those eight years, what policy was taken by Nissan management? The following explains it briefly. ( nissan/index.html) In 1991, Mr. Kume, the company’s then president announced 1991 - 1993 medium-term business management plan, which aimed at ‘establishing a profit-making business style’. In order to achieve the goal, it emphasized increasing overall productivity, implementing cost reduction for domestic production as well as for purchases, while increasing efficiency at the headquarters and overall production efficiency by combining development and production. However, with the collapse of Japan’s bubble economy, the business results of the company also deteriorated. As domestic demand decreased further in 1992, it re-identified its goal as building a structure that produces reasonable profits with the production of two million cars (1.2 million cars for the domestic market and 0.8 million for export), while implementing 29

measures promoted by the 1992 - 1994 medium-term business management plan such as ‘corporate reform toward a high profitability style of business’ and ‘securing reasonable profits between 1992 and 1994’. Though it hoped to have a current account surplus, the result was a deficit. EARNING PERFORMANCE NET INCOME
2 1 0 % NET -1 INCOME -2 -3 -4 1988 1990 1992 1994 1996 1998


In 1993, Mr. Tsuji, the company’s then president regarded its 1993-1995 medium-term management plan as a business structural reform, and made drastic restructuring plans, closing the Zama plant, firing its 5,000 workers within two years, and transferring its textile machine division to a new company. Moreover, with the intention of avoiding three consecutive years’ deficit, the plan reduced the amount of the year-end bonus by 60,000 yen (US$565) for each worker. In spite of the restructuring, however, the company recorded a current account deficit for the first time in its history. As domestic and overseas demand remained low in 1994, Nissan announced implementation of a structural reform plan to achieve a 1.8 million domestic production system by accelerating the 1993-1995 medium-term management plans, following the 1994-96 medium-term plans. Besides, in order to reduce electricity bills, it decided that employees should work on weekends during the summer. The result of these measures was a loss of profits three years in a row.


2 1 0 % NET -1 INCOME -2 -3 -4 1988 1990 1992 1994 1996 1998


In 1995, the 1995 - 1997 medium-term management plans were drafted, with the intention of rebuilding the company. The three year goal was maintained, aiming at establishing the 1.8 million production system (already 1.6 million in 1994), improving sales and brand power, while reducing direct and indirect employees by 20 percent. With the closure of the Zama plant as well as the weekend working during the summer, the company somehow had a current account surplus. NUMBER OF SUPPLIER GROUPS
1200 1000 GROUP SUPPLIERS 800 600 400 200 0 1999 2002


In 1996, a labor cost reduction scheme was implemented. This reformed the salary system for the worse (increasing the percentage of the merit-based system) and reducing the salaries of middle-aged and older workers. Also, it recommended an early retirement 31

plan for senior workers as it hoped to reduce labour costs further. As a result, consolidated accounting got into the black in the second year of the 1995-1997 mediumterm plans.

In 1997, president Hanawa announced a new goal: it would increase domestic share to 25 percent by 2000, and to 30 percent by 2010. In order to raise sales, 30,000 sales personnel were trained with the necessary skills. The Global Business Innovation mentioned earlier was introduced in 1998, and working two consecutive shifts was also introduced at some vehicles assembly plants to reduce labour costs. In 1999, the business of Nissan’s textile division (Nissan Texsys) was transferred and the Fuji plant was converted to a new company, while the forklift division was sold off. It was also this year that the capital alliance with Renault and the introduction of the Revival Plan were announced. The number of Nissan employees in Japan reduced from 57,000 in 1990 to 38,000 in 1998. It became obvious that Nissan’s management policy was to cut the number of employees as easily as cutting the tail off a lizard. Without knowing the pains experienced by the workers, it gave up the idea of company reconstruction and quickly turned to foreign capital without shame. In 1998 Nissan was on the ropes. The company was hemorrhaging cash and it continued to suffer from lackluster products that ensured a falling market share. With Nissan heading toward bankruptcy, its president mounted a worldwide campaign to snare a rich partner to help Nissan through its financial mess. Since the American experience in Japan had been lackluster at best and financially painful at worst, there was no excitement in Detroit over a bailout effort that would be both expensive and distracting. The unlikely rescuer was Renault and its former tire company executive, Carlos Ghosn. 32

Under Ghosn's leadership Nissan went from losing billions to making billions within three years. The company is now on a roll launching new eye-catching models, increasing its capacity in the United States and restoring its once debt-ridden balance sheet. ( The miraculous Nissan turnaround has made Ghosn a corporate icon in Japan. The speed of the turnaround compared to the General Motors and Ford decade long odyssey of trying to revive Saab and Jaguar, respectively, or Chrysler's plunge into the red after bringing a dowry of $7 billion to Daimler at the time of the 'merger" has left auto executives around the world asking how he did it. In reality, Nissan had assets that most ailing auto companies lack but Renault's strategy also has a message in it.

GRAPH:Nissan car assembly system 1999 For starters, Renault sent in the 'A team" to fix the mess. They carried the clout to get the job done and they didn't have to clear every move with the home office because they were the home office. They went without knowing much of Japanese business culture but they knew what had to be done to stop the cash drain. After a face-saving few months, the top Japanese management was kicked out, an essential part of any turnaround since the guys who made the mess couldn't be allowed to remain in their offices grousing at the foreigners who were not playing by Japanese rules.


Then Renault did not predicate a Nissan turnaround on theories of global parts and product sharing, a seemingly indispensable ingredient in every acquisition of every down-and-out auto company on the planet How often have all of us heard the inflated cost savings estimates that justify spending billions of an auto company that is more a name than a business! Instead, Ghosn and his team knew that Nissan had to be revived before there could be any talk of collaboration with Renault Nissan had to save itself and that work had to take precedent over some grand global scheme to justify the investment Instead of synergy teams that looked for ways to globally source paperclips, Ghosn fixed Nissan from the inside without any interference from Renault.

Renault and Ghosn got lucky in that Nissan, at the operating level, was still a very strong company. It had suffered through three decades of miserable leadership but they knew how to build cars. What Ghosn found was a company with rich engineering expertise, strong production skills and plenty of interesting products that could be sped to the market Unlike most acquisitions, including Daimler's takeover of Chrysler, the future product cupboard wasn't bare. Ultimately cost cutting doesn't save an auto company, product does.


3 2.5 2 TRILLION YEN 1.5 1 0.5 0 1988 1990 1992 1994 1996 FISCAL YEAR 1998 50% dec 2002

Ghosn also found plenty of assets that could be quickly converted into cash. Nissan was loaded with shares of its keiretsu affiliates and mostly its suppliers. That stock was sold off as fast as possible to provide the company with cash to run the business and pay down debt, a trend which many Japanese companies subsequently embraced. That let him buy parts and components from the lowest cost or best supplier not one that was a member of the Nissan family. Excess staff was terminated and some capacity in Japan closed.


Nissan is now restored as a full member of the Japanese Big 3. It will increase its market share in the United States and elsewhere to the dismay of its rivals. And it will be done without slapping a Nissan badge on the rump of a Renault car.


Nissan has to confront a number of vehicle manufacturing giants. Maintaining the brand equity or rather improving upon the brand equity and climbing the ladder is not such an easy task. Carlos Ghosn like any other human, has high visions for Nissan. In Japan, Nissan is the second largest car manufacturer, whereas it falls into the 7 th position when put on the global scenario. Nissan faces competition from a number of companies such as General Motors, Toyota, Honda, DaimlerChrysler AG, Ford, the Volkswagon Group, Mazda, Mitsubishi and so on. We shall discuss a few of its most close competitors. Nissans largest rivalry comes from its homeland. Toyota and Honda pose to be the greatest adversaries of Nissan. The battle has been waging over and over years and continues. Nonetheless there exists a mutual understanding and corporation when it comes to business. Out of the three, Toyota continues to hold the monopoly of trade in Japan. We shall see five worthy companies that make a remarkable presence world wide. The five companies that we shall consider are: • • • • • Toyota Honda BMW Ford DaimlerChrysler


Being the fastest rising star in the industry, Toyota was forecasted to overtake Ford to be the world's second largest car maker in 2005. The prediction was observed with felicitations. Now GM is also within reach. Toyota is going stronger and stronger in recent years. At home, its cars engage 6 of the top 10 places at domestic sales chart. The local sales that Toyota displays in Japan is nearly double the output produced by Nissan. At North America, it is growing quickly and is going to overtake Chrysler soon. Camry has been the region's best selling cars for years, while Lexus is the best selling premium brand.

Fig 17: Toyota Camry

At Europe, Toyota is gaining momentum like no others. Its French-made Yaris broke into the traditionally closed market and even won European's top award. Toyota's success is partly due to its care to build quality and service. For many years it used to make boring cars, but people still bought a lot of Toyotas because they had 38

confidence in their quality, reliability and aftersales services. In recent years, Toyota started tactling it weaknesses one by one. Dull-looking cars are replaced by stylish ones (Yaris, bB, Caldina, Celica and new Lexus IS); Dull-driving cars are injected with good dynamics (Altezza), conservative replaced by innovation (Prius). Besides, it also started integrating the excessive platforms in Japan to reduce cost. The process is still on going, so in the foreseeable future Toyota will only get stronger. The new Camry design was revolutionary in the sense no one would have guessed that Toyota actually gave to thought to promoting a new design for the car.

Lexus, Daihatsu, Hino, Subaru In 1937, the Toyota Motor Co. Ltd (TMC) was founded by Kiichiro


Toyoda as a spin-off from Toyoda Automatic Loom Works. The first car, AA, was launched a year before. It was based on Chrysler Airflow’s design but with some Chevrolet’s input. But the real growth started in the late 50’s - From 1955 to 1961, production scaled up by 10 folds to 211,000 cars per year. The Crown of 1955 was the first car entirely developed by itself. In 1966, the Corolla was launched as the best seller in its line-up for the following 30 years. In 1972, the company’s annual production exceeded the 1 million mark. The 2 million mark was reached 4 years later. Economy boom during those 2 decades benefited all Japanese car makers, but Toyota’s unique production system, including the "just in time" parts delivering system, established a solid status as Japan’s biggest car maker, consistently beating arch-rival Nissan (Datsun). The domestic factories in Toyota City reached their peak in 1990, with over 4 million cars produced that year. Hitting by world-wide recession and the call for protectionism in the US, Toyota had to move more production to overseas, mostly in the US, and reduce domestic production. The Camry, being built in the Kentucky plant, became America’s best seller since 1997. The Corolla continues to be the world’s biggest selling car.


The biggest achievement in recent years is the establishment of the Lexus brand, which is a luxurious car division competing with Mercedes and BMW. Launched in 1989, the LS400 immediately outsold its competitors in the US.


Honda is a typical miracle for Japanese industry. Without any help from others, Honda took just 20 years to become one of the world’s most fearsome car makers. It made the best selling car in North America, Accord. It made the first Japanese supercar, NSX. It dominated the Formula One scene for six straight years. It has established an image for advanced technology, reliability and creativity. Today, it is the only independent mainstream car maker securely safe from being took over or merged.

Fig 18: Honda Civic

In recent years, Honda showed its vision in the new trend of vehicle and incomparable flexibility - products like CR-V and HR-V caught right on the market demand, while many of these cars are designed to be based on the Civic platform to cut cost. It is the first mass production car maker to be able to build cars with different width and wheelbase on the same production line.


Japanese car makers used to be described as copycats. Honda is an exception. Its cars are usually trend-setting, such as Fit (Jazz), Mobilio, HR-V and Odyssey, have original styling and sometimes employ innovative styling.

Acura, Mugen A legendary man created a legendary company. Soichiro Honda was


born in a family running a small workshop for repairing bicycles. In 1937, he started his business by making piston rings designed and patented by himself. Interestingly, Toyota, its arch-rival today, held 40% equity in that company and used its piston rings. Honda Motor Company was founded in 1947 as a motorbike maker, which eventually became the largest motor cycle maker in the world. The first car debuted in the early 60’s, coinciding with Honda’s first taste of Formula One racing in 1964. Soichiro Honda always pushed his men forward, challenging their upper limits. The F1 project gave them valuable experience, and confidence, because they recorded a win in 1965. The road car business surged in the 70’s following the oil crisis and smog control launched in the US. The Civic was proved to be an economical car and being the first car to pass the emission test without fitting catalytic converter, thanks to the patented CVCC combustion chamber design. Meanwhile, the Accord let the American knew that Japanese cars were not only economical but also reliable and good at every aspect. When the US big 3 realised that, the Accord was climbing to the top of the US sales chart, that was a shock to American. Facing with the protectionism in the 80’s, Honda enlarged its production in the US. Those plants were set up in the 70’s and was already praised of high efficiency and superior quality control. Eventually, all the cars selling in the US are produced locally and qualified as "domestic car". The protectionism was overcome. The 80s also saw the investment in British sinking car maker, Rover. Honda built a small plants in UK to make Accord. It also supply engines and various components to Rover 200, 400, 600 and 800, which were derived from Civic / Concerto, Accord and Legend. 42

However, Honda refused to take over Rover, so in 1994, when Honda was facing a sales drop in domestic market, Rover was taken over by BMW. The history of globalisation stopped there, but the product line-up continued to stun the world. VTEC was first introduced in 1989 in Integra and became standard today. Next year, the first Japanese supercar, NSX, was launched and immediately praised by journalists around the world. On the racing circuits, partnership with Williams and McLaren resulted in 6 consecutive constructor championship from 1986. Soichiro Honda still tested new models until he was 65, a few years later he retired. At the age of 85, in 1991, he died. Since 1988, Honda was headed by Nobuhiko Kawamoto, the ex-R&D director has no less influence to the company, transforming the product from engineer-oriented to market-oriented. Therefore after a brief sales crisis in the mid-90s, Honda recovered quickly. In 1999, for the first time, Honda overtook Nissan to be the second best-selling car maker in Japan. However the accomplishment didn’t stand for long. Nissan came back with superior


Undoubtedly, BMW has been one of the most desirable mass production marque since the 60’s. It has a proud record for being the only car maker recording a profit every year after World War II. Despite of the challenge from Alfa Romeo, Audi and Lexus, BMW still builds the best sports sedans in the world. Alfa and Jaguar had been there decades ago but both of them ignored the potential of the sports sedan market. BMW took it with 02 series in the 60’s and never look back.

Fig 19: BMW Coupe

While it was still performing good, its subsidiary Rover was on the contrary. BMW purchased the Rover group in 1994, making it the 7th largest European car maker. The British group was declining since the 70s but it has a rich collection of many valuable marques, such as Austin, Healey, MG, Triumph and the King of off-roader, Land Rover. (Among these brands, only MG, Rover and Land Rover are now being used, plus the model Mini now sees as a brand name) However, group CEO Bernd Pischetsrieder gave the British arm too much independence, without sharing much cost with BMW itself. 44

Moreover, flawed design of Rover 75, wrong market positioning of Rover 200 and 400, and build quality problems for Land Rover Freelander also contributed to the sales decline. As a result, Rover has recorded heavy loss for 2 successive years. m Therefore Bernd Pischetsrieder, together with the no. 2 man, Wolfgang Reitzle, were sacked in 1998. In April 2000, BMW eventually sold Rover (plus the marque MG, Austin, Healey, Morris and Wolseley) to a group called Phoenix. "Jewel of the crown" Land Rover was sold to Ford for covering the loss made by Rover. BMW only retains the Mini brand (plus Triumph and Riley) and the Crowley plant in which the production of new Mini takes place. Apart from the various brands held by ex-Rover, starting from 2003 the famous RollsRoyce name will also come under BMW's control. Although Volkswagen beat BMW to buy Rolls-Royce and Bentley in 1998, the former threaten to withdraw the "Rolls-Royce" brand name via the relationship with jet engine maker, Rolls-Royce Plc, which owns the rights to the brand and favoured BMW right from the beginning. Therefore the German rivals made an agreement : until 2003, RR will still be ran by VW; after that BMW will take back the name and produce RR in a new factory in Goodwood.
SUBSIDIARIES: Mini, Rolls-Royce, Truimph


Bayerische Motoren Werke (or Bavarian Motor Work) was established

in 1913 as an aircraft engine maker although the name was not adopted until 1917. In the whole pre-war era its business was mainly concentrated to aircraft engines and motorcycles, which is now the biggest in Europe. Its first production car was a simple and cheap car named "Dixi", which was simply an Austin Seven produced under licensed. However, it was the 2-litre sports car 328 which made reputation for the company in 1936. This elegant and aerodynamic efficient sports car had strong presence in motor racing and took a class victory in Mille Miglia. 45

After WWII and a 3-year ban of production by Allies, it started working on its own mass production car. The model 501 was presented in 1951. Then came the classic V8 sports car 507. However, BMW was not classified as a volume car maker by making these commercially unsuccessful models. What it needed is the model 1500 which appeared in 1962. The compact sport sedan pointed to the correct direction, which led to even more success in the following 02 series. With the powerful 2002 and even 2002 turbo, BMW emerged as an expert of sports sedans. The Motorsport division was established in 1972 and developed the M-cars, starting from the mid-engined M1. At the same year, the business expanded to larger cars, 5-series. When the 3-series was launched in 1975, there was still no one else realised the potential of the market opened by BMW. When Mercedes finally did it with the 190E in 1985, the 3-series had already entered its second generation. The third generation in 1991 was even more successful, it left a record that the current generation hard to match. BMW continued going upmarket by introducing 7-series in the early 80’s. The first generation was not really as luxurious as Mercedes’ big model, but the second generation in 1987 really did that. It even introduced a V12. However, BMW is not always successful. The replacement of 6-series by the big and expensive but cramped 8-series was a failure. The Z3 roadster also received many criticism about its handling as well as styling. Luckily, BMW did not make such mistakes in its main stream sedan models. Another failure is the take over of Rover Group in 1994. The loss in Rover nearly offset the profit generated by its German mother company so that BMW eventually sold it in 2000.


Standing at the second position of worldwide sales for 77 years, Ford is going to be replaced by Toyota in 2005. Like GM, Ford is an example of the decline of US motor industry. It fails to defend its home market against the Japanese and Korean car makers. In the late 90s, Ford poured all money into the rapidly growing truck and sport-utility market, handing the conventional car market to the Japanese. But the legal battle against the roll-over of Explorer SUV led to a credability crisis and an poor image on quality. When new chairman Bill Ford Jr, great grand son of Henry Ford, took control in 1999, he refocused the business on the car side. But it was already too late.

Fig 20: Ford Mustang GT

A series of wrong product strategy and poor execution resulted in disappointing sales. The Five Hundred sedan is ugly, too conservative and underpowered. Sales of sister car Freestyle is also disappointing. The lack of a replacement to Focus in the America is also a hint of the company's short-sighted vision and passive strategy.


The brand strategy is also in question. Ford is supposed to be the bread-and-butter brand, Mercury is a more upmarket brand while Lincoln is more luxurious again. However, Ford never has the money to differentiate Mercury from Ford. As a result, Mercury's cars are barely rebadged Fords with more a different grille and more equipment. And then there is the talk of revitalizing the Lincoln brand. Many concept cars have been shown but none materialized. In the end the plan disappeared quietly. Ford's management changes mind day by day. Like GM, Ford does not management its overseas operations very well. In recent years, Ford Europe recorded losses more than profits. PAG (Premium Automotive Group) - a combination of Volvo, Jaguar, Land Rover and Aston Martin, is also bleeding quickly due to the failure of Jaguar's expansion. The only clear success is Mazda, which consistently earn money for Ford. Ford’s European operation and Australia arm have their own production and car development program. The former is one of the Europe’s big 6 while the latter is struggling to retain its R&D independence.
SUBSIDIARIES: Ford, Mercury, Lincoln, Aston Martin, Jaguar, Volvo, Land Rover, Mazda


Ford is renowned for being the driving force of industrial revolution by

introducing mass production. It was founded by Henry Ford in 1903 in Detroit. Two years later, the production rate rose to 1,700 cars a year, mostly was the early Model A. He continued the alphabetic naming rule. By 1908, he went through 19 letters and had gone to Model S. However, the real revolution was the next one, Model T. Success of the early Model T was due to its simple and reliable design. Because of its low cost, it attracted 11,000 customers in the first year, breaking any previous world record. By 1913, Ford was producing half of the cars sold in the US, but Henry Ford did not feel content with this result. He built the first mass production plant in that year. It employed 48

streaming production lines. Every worker was assigned a specific place to do a specific task. The cars move automatically from one assembly stage to another, at last finishing all the work. This smoothened the production process, thus increase efficiency. Continuing improvement eventually raised the production rate to one car every 10 seconds ! As a result, cost reduced and Ford reduced the price, which boost sales and reduced production cost again. At last the Model T was sold at just $260, which fulfilled the dream of the American public. Cars became a transportation for every ordinary American. Henry Ford had another contribution to the industrial revolution : he set a minimum wage of $5 per day, which is more than double the existing minimum rate. He explained that was not only a social revolution but also helped its workers to buy more Model T ! He said "If you cut wages, you just cut the number of your customers" After the 19 years of production, Model T set a production record of 15,007,033 units, which was not broken until Volkswagen Beetle. In 1922, the world no. 1 car maker bought Lincoln as its luxurious cars division. Undoubtedly, Henry Ford was a great production expert, but he seemed to be not so great in engineering and marketing. There was a joke about the lack of choice of Model T’s colour : "You can choose whatever colour, as long as it is black." Ford saw the production simplicity came first, not the customer’s requirements. His another problem was relying too much a single model. When Model T got old, he faced strong challenge from the various attractive models from General Motors. For example, the Chevrolet has 6cylinder engine. ssan By 1927, all Ford plants closed for six months to retool for a new car, Model A (the second time to use this name). It was an improved version of Model T, still simple and reliable, but larger and more modern. In response to GM, the first production V8 was 49

installed to Model A in 1932. However, Model A did not fight off the competition from GM. The single model policy no longer worked, so was the Henry Ford legend. The company was sinking until well after WWII, losing its top spot to GM, then the second position to Chrsyler .... The president position shifted to Henry’s son, Edsel, but after his death in 1943, Henry came back shortly until his grandson, Henry Ford II, succeeded him in 1945. Henry died in 1947. After WWII, the loss-making company started a reform which led to a wider model range. In 1949 it climbed back to the second position. It sold 807,000 cars that year, the best since Model A. The post-war Ford rose gradually without much miracles, excluding the Mustang. Lee Iacocca, boss of the Ford division, brainstormed the idea of pony car whose concept was : a cheap coupe with powerful engine and upgradable nature. It need not to be really sporty, therefore instead of high-tech engine, it should be installed with mass-produced big V8. Besides, long list of options, including equipments, cabin trim, decoration, straight six and V8 engines of various sizes and tune, 3 or 4 speed manual gearbox or automatic, enable the buyers to tailor-make their cars. A college boy can buy a base model with 101 hp straight six and the leanest trimming, while a young executive may order a 271hp V8 version loaded with all the luxury items. Being the pioneer of pony cars, Ford Mustang enjoyed huge sales success - 2 million cars were sold in its first 4 years ! This means it became the most popular sport-purpose car of all time. In the 70’s, all US car makers were threatened by the oil crisis, smog control, hence the invasion of Japanese small cars. Ford coped well by stopping making the old-tech big cars and poured billions R&D budget into new technology research. The collaboration with Mazda also helped developing its small cars, Escort. The tradition of making conservative cars disappeared with the launch of the Taurus in 1985, a modern car even 50

in the eyes of European and Japanese. The second generation Taurus, in 1996, was even complained for too radical in styling. Then came the "New Edge" design in Cougar and Focus. Ford looked optimistic in the latter half of 1990s. Ford acquired Aston Martin in 1987, Jaguar in 1990, Volvo in 1998 and Land Rover in 2000. These four European divisions were integrated into PAG (Premium Automotive Group) with the aim to increase share in the premium car market. In particular, Jaguar received the biggest push, adding S-Type and X-Type to the lineup. Unfortunately the plan was a big failure.


Mercedes-Benz is the oldest car maker in the world. It is also renowned for building the finest luxurious cars. While Rolls Royce was satisfying with building cars slowly by hands, Cadillac was going down market, M-B always keep moving forward. It keeps exploring new technology in virtually all area - aerodynamics, high tech engines, transmission (it builds its own automatic box), suspension and safety. Considering the medium production volume, its investment in R&D per car is probably the highest in the industry. It is never bounded to tradition - 190E, A-class, Smart and ML-class are the examples.

Fig 21: Mercedes Benz S-Class

Mercedes-Benz is one of the main subsidiaries of Daimler-Benz, which is the largest industrial group in Europe and whose business also include making truck, rocket, satellite and railways. Because of the strong background, Daimler-Benz acquired America’s Chrysler in 1998 to form the 5th largest car maker in the world, DaimlerChrysler.
SUBSIDIARIES: Mercedes-Benz, Daimler-Benz, Chrysler, Dodge, Plymouth, Jeep, MCC (Micro Car Corporation), AMG



Studying the history of Mercedes-Benz is similar to studying the history

of motor cars. It is because the inventors of motor car, Karl Benz and Gottlieb Daimler, were also the founders of Mercedes-Benz. Therefore M-B is the world’s oldest car maker. In 1885, Gottlieb Daimler and Karl Benz created petrol internal combustion motorcycle and 3-wheeler, respectively. Daimler's car was very raw, basically was a wooden bicycle installed with his own motor. Benz's car appeared several months later but it included advanced design such as battery-powered ignition and differential, though it can barely reached 8 mph because the motor output less than 1 hp. Next year, Daimler further put his world-leading engine into a horse carriage, this became the first 4-wheel motor car in the world. These 2 Germans were actually competitors although they worked just 60 miles apart. They established their own companies independently, that is, Benz and Daimler. The latter was renamed to Mercedes after the daughter of sales director Emil Jellinek. Daimler became the parent company which expanded into other industrial business. However, the inventors started to lose leading edge. French maker Panhard Levassor and Peugeot pioneered many new concept. Ford started mass production in 1908 while Mercedes and Benz were still making luxurious cars in limited amount. When the sales of Model T exceeded 1 million units in the mid-20’s, Mercedes and Benz faced financial crisis as Germany lost the first world war. This forced them to merge into MercedesBenz. In the 20’s, Austrian Ferdinand Porsche served M-B as chief engineer and gave birth to the supercharged S, SS and SSK sports cars. These cars brought M-B with motor racing heritage which would be followed by more GP cars from the 30’s to 50’s. The S series also established a prestige yet powerful image for the company. It might not be as elegant as Bugatti, but M-B always produced more cars to fulfil the demand from German Government officials and tycoons. Adolf Hitler was especially a loyal supporter of Mercedes. 53

The grand tourer 500K / 540K was perhaps the peak of the pre-war Mercedes. Their build quality and classical styling had gone out of the shadow of Bugatti. After WWII, Mercedes scaled up the production gradually and introduced medium size models. At the upper end, the 300SL gullwing and 300SLR of the 50’s still thrilled the motor racing world. The 60’s saw M-B returned to radical idea with C111 concept car, a mid-engined sports car powered by rotary engine. Through the 70’s it started experimenting ABS, air bag, self tightening safety belt etc. In the 80’s and 90’s, we saw the company expanded quickly. Model ranges spread to lower price sector, first with 190E, then further with A-class. It also produced its first road-use SUV, ML-class (G-wagen was initially made for military purpose). The sports cars family has added SLK, CE / CLK to the range topping SL. There was a hard time in the early 90s. The strong Deustch Mark, the high salary, the reunion of Germany and the recession in US hit Mercedes hard. It had to change its "engineering first" philosophy and let accounting men to keep development budget tightly in control. The 1996 E-class saw the first downgrade in quality. In the following decade, Mercedes was troubled by sliding quality image (as shown in JD power's statistics) and faulty cars (as seen in large scale recalls). Daimler-Benz group acquired Chrysler in 1998 to form the 5th largest car company in the world. Two years later, it bought 34% controlling stakes in Mitsubishi, which was in financial crisis. However, Mitsubishi did not stop bleeding since then, thus DaimlerChrysler finally withdrew in 2004. Another unsuccessful investment is Smart. The Smart city car idea was originated by SMH, the Swiss group producing Swatch watches. Initially, Mercedes bought 51% of the company MCC (Micro Car Corporation) and helped putting the Smart into production. But the joint venture turned out to be a sales failure. Mercedes acquired all stakes of the company and tried to rescue it by expanding the Smart brand to a 3-model lineup 54

(Fortwo, Roadster and Forfour), but it continued made loss. Eventually Mercedes decided to leave only the Fortwo survives and integrate Smart into Mercedes' own operation.


DEVELOPING AND MANAGING AN ADVERTISING PROGRAM How did Nissan exploit the potential of message execution and publicity? Advertisements are the cost effective ways to disseminate messages. Organizations handle advertising in different ways. In small companies advertising is handled by someone in the sales department, who works with an advertising agency. A large company will often set up with its own department, whose manager reports to the vice president of marketing. Choosing an advertising message: Many of today’s ads for automobiles are monotonous, a car driving 90 miles an hour on a curved mountain road, with the result that only the weak link is established between the brand and the message. Nissans advertising campaigns vary in creativity. A good ad generally focuses on core selling preposition. Dik Twedt suggested that messages be related on desirability, exclusiveness and believability. The message’s impact depends not only on what is said, but often more important on how it is said. Some ads aim for rational positioning and other for emotional positioning. Whereas NISSAN ads tend to be more indirect and appeal to emotions.

(one picture of add)

This ad shows not the car but the beautiful scenes from nature aimed at producing an emotional association and response.


Nissan finds the viral path
by Darren Ravens Independent Front Suspension or IFS. It's been around for ages (around 70 years) but I'd bet most people know very little about what it does. Nor do they care. If you're a car manufacturer then, how do you draw attention to this technology? How do you keep the male target audience interested for long enough to explain what it does? Perhaps its one of those things best explained graphically: Can anyone suggest a reason for this Nissan Pathfinder ad's success?


How can a company make better brand decisions?


It is the set of all products and items that a particular seller offers for sale.A companys product mix has a certain width,length,depth and consistency. These four product mix dimensions permit the company to expand its business in four ways.It can add new product lines thus widening its product mix.It can lengthen each product line.It can add more product variants to each product and deepen its product mix.Finally the company can pursue more product line consistency.


A product mix consists of various product lines.Car manufacturers built their car around a basic platform.This modular approach enables the company to offer variety while lowering production costs. Product lineanalysis: Product linemanagers need to know the sales and profit s of each item in their line in order to determine which item to build, maintain, harvest or divest. The also need to understand each product lnes market profile. Product line length: A product line is too short if profits can be increased by adding items; the line is too long if profits can be done by dropping items. Line Streching: It is occurs when a company lengthens its product line beyond its current range.The company can sketch its line downmarket, upmarket or both ways. DOWNMARKET STRETCH: A company positioned in the may want to may want to introduce a low priced line due to strong growth opportunities, have alliances with lower end competitors who might otherwise try to move up market or find the middle market stagnating or declining. UPMARKET STRETCH: Companies may wish to enter the high market end for more growth, higher margins or to simply position themselves as full line manfacturers.The leading japnese auto companies Nissan have each introduced an upscale automobile called Nissan’s infinity. TWO WAY STRETCH The company serving the middlemarket might decide to stretch their line in both directions.


It is no longer enough to satisfy customers.You must delight them. Companies consider customer as the center of their culture.Nissan goes about winning customers and out performing competitors.

Fig: Determinant of customers service value E1ha2VJRHM9OXxNb2RlbElEcz0tMQ%3d%3dj917j7Xg9b4F9c9VBs%2bE3g%3d%3d&gclid=CIzFk4mPzokCFR8CTAodFnnjMg


It is the difference between the prospective customer’s valuation of all the benefits & all the cost of the offering & the perceived alternatives.

Whether the buyer is satisfied after puchase depends on the offer’s performance and the service provided after purchase in relation to the buyer. In DUBAI Nissan provides the owner with a taxi when they come up for servicing thir cars which is an unexpected service by the customer.But more we keep up to the customers expectations and satisfy them more they expect from us.In this manner Nissan is puts in its full effort not to disappoint its customers and provides them with unexpected services for the past few years.Nissan also invites potential Infiniti buyes to drop in for a “Guest drive” (NOT “Test drive”),because the Japenese word for customers is “Honoured Guests”. In an interview CHARLES GHOSN when asked “What is your company's biggest challenge?”
he said that “For

us and for everyone in the industry, it is making sure the customer

experience is one that is clearly ahead of the competition and one that the customer looks at as a delightful experience.”. About product quality of nissan he said that “We are recognizing them first, reacting to them and improving them quickly. For example, when the Altima went on the market, it was very successful. But even though it was successful, the negatives we got from customer feedback [indicated that] we could do a better job in terms of the interior quality. We took to heart the reaction of the customers. We made a lot of modifications of [the Altima's] interior this year, and we're getting great feedback.” Discussing about the creativity of the company “You will see bolder, more impactful designs. Our designers are talented, and they also are working in an environment where the role of design is recognized and is balanced with engineering, marketing and product planning. We also try to create a high level of adherence between design and performance of the car itself. A design is appealing but only becomes successful when you drive the car and you recognize the high level of consistency between the design and the car's performance. An inconsistency between the two will result in a fad that will not last. One of the successes of the Z is that the design suggests a kind of car. You get into the car, 61

drive it and you recognize it. Same for the Murano, the Armada, the QX56, the Titan. What's important is not the design itself, but the consistency between the design and the driving performance. And you'll also see more consistency between the outside and the inside of the car.”

When should the company initiate a price change and how should it respond to a competitive price change? The best way to get and maintain customers is to constantly figure out how to give them more for less. Price is the element of marketing mix that produces revenue . They help us to adjust product features, channels and even helps the company to promot the product. Price elasticity in Market: The B2B price elasticity of demand can vary from market segment to market segment and also with in customers depending on many factors.  The value that product or service represent the product .  The importance of component in the cost structure of the customer’s product.  Information available on alternative products and prices.  The cost involved in switching from one supplier to another  The risk involved in moving supplier  The amount of competition  The availability of substitute products over both short and long term Price Negotiation in B2B:


“You don’t get what you deserve , you get what you negotiate” according to benefits demanded , length of contract(any)

Prices can differ

If any ,quntity amount wanted ,delivery conditions , payment method and power relation and partnership arrangements between the negotiating companies. Depending on the B2B product and market condition , price might always be poen to some degree of negotiation.

The Internet and Differntial Pricing:
Electronic markets can reduce customers cost for obtaining information about a prices and product offerings from alternative suppliers. They also reduce the supplier’s cost for communicating information about prices and product characteristics to customers. The typeof B2B arrangement that raises the most antitrust questions involves co-operative efforts by members of the same industry to buy or sell over the internet.Renault and Nissan provides fledging co-operative effort and services to firms in the automotive supply chain through internet . Pricing is the most antitrust problem , most commonly identified with co-opoerative B2B arrangement. Nissan post’s its own individually established prices and free to negotiate pricing with particular customer (eg: Offline Pricing) then pricing fixing problem will not probably arise.

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BIBILIOGRAPHY BOOK REFERENCES: 1. Marketing Management -- Dr.C.B.Gupta, Dr .N. Rajan Nair. (Published by Sultan chand and sons) 2. Marketing Management -- Philip Kotler (Published by Prentice Hall of India , Private Limited) 3. Introduction to Marketing Management--- Stewart .H. Rowoldt, James D scott, Martin R Warshaw,( Published by Richard D Irwin; Inc) 4. Foundations Of Marketing – M. Dale Beckman, David L Kurtz, Louise E Boone.( Published by Holt , Rinehart and Winston of Canada Ltd) 5. Fundamentals Of Marketing – William J Stanton , Montrose S Sommers , James G Barmes (Published by Mcgraw Hill Ryerson Ltd) 6. Essentials Of Marketing – Mc Carthy/ shapiro / Perreault (Published by Irwin Homewood ). 7. Marketing & Management Cases and Concepts –n Nihilesh Dholakia , Rakesh Khurana , Labdhi Bhandara , Abhinandan K Jain(Published by Mac Millan India limited ) 8. Marketing & Customer Behaviour – John R G. Jenkins (Published by Pergamon Press) 9. Marketing -- , Maurice I Mandell , Larry J Rosen Berg (Published by Prentice Hall of India , Private Limited) 10. Marketing In India – S . Neelamegham (Published by Vikas Publishing House Pvt Ltd.) WEBSITES: 1. ake=Nissan 2. 292a5391c 3. 4. 5. ZT0wfE1ha2VJRHM9OXxNb2RlbElEcz0tMQ%3d%3dj917j7Xg9b4F9c9VBs%2bE3g%3d%3d&gclid=CIzFk4mPzokCFR8CTAodFnnj Mg 6. 64

7. 8. 9. 10. REFERENCE: BOOKS: 1. Marketing Management -- Philip Kotler (Published by Prentice Hall of India , Private Limited) 2. Foundations Of Marketing – M. Dale Beckman, David L Kurtz, Louise E Boone. ( Published by Holt , Rinehart and Winston of Canada Ltd) 3. Marketing & Management Cases and Concepts –n Nihilesh Dholakia , Rakesh Khurana , Labdhi Bhandara , Abhinandan K Jain(Published by Mac Millan India limited ) 4. Marketing In India – S . Neelamegham (Published by Vikas Publishing House Pvt Ltd.)

WEBSITES: 1. 2. 3. 4. 5. 6. ake=Nissan 292a5391c



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