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Staff Writer

The car company that has spent the last year telling consumers that life is an adventure and to “Enjoy the Ride” is traveling down some bumpy roads of its own.

Despite a change in its advertising strategy and the replacement of some of its top executives, U.S. sales for Nissan Motor Corp. continue to plunge leading analysts to suggest that the company needs to take even more drastic measures.

“They can change heads and people in offices all they want, but at the core they have to focus more on North America for product,” said James Hall, vice president of industry analysis at AutoPacific Inc., a Santa Ana-based automotive consulting firm. “If they re-cover the deck chairs, that doesn’t mean the iceberg isn’t out there.”

The number of Nissan autos sold in the United States in 1997 was 28.9 percent lower than in 1996. That’s considerably worse than competitor Toyota Motor Corp., whose U.S. sales dropped 5.7 percent from the previous year, and Honda Motor Co. Ltd., which had an increase of 3.3 percent during the same period.

In February, Honda saw its U.S. sales increase 8.3 percent from the like period a year earlier, while Toyota had an increase of 5.7 percent. Nissan sales fell 28 percent.

According to Hall and other industry analysts, Nissan’s problem is twofold: Its automobiles are not priced or designed to make them competitive with those sold by Honda and Toyota. And its high-profile ad campaign, while helping build the Nissan name, has failed to tell consumers about the features and benefits of specific Nissan cars and trucks.

Nissan’s Altima illustrates some of the company’s problems, according to Robert Duronio, an analyst with AutoPacific. The midsize car is priced at about $16,280 retail for a bare-bones model. But it’s not able to compete effectively with Honda’s Accord, retailing at $16,295, because the Nissan is smaller than the Honda, Duronio said.

“You’ll feel a little bit more constrained in the Altima than you would in the Accord,” said Duronio.

Debra Sanchez Fair, a Nissan spokeswoman, said the automaker has increased the size of the Altima for the 1998 model year, based on recommendations from consumers.

“They said, ‘If you changed anything, you might increase a little bit on the interior volume,’ and we did so. So we listened to the market sector we were going after,” she said, adding that the Altima’s interior is 2.1 cubic feet bigger now than it was in the 1997 model.

But Hall said this year’s changes came too late to recapture many customers who chose the Accord or Toyota’s Camry because of their roominess.

Nissan observers point out that the company’s product planning division, which is responsible for such things as the roominess of interiors, reports to Japanese executives, who may not be as aware as North American executives of U.S. market demands.

But one former Nissan insider blamed the problems on the leadership of former Nissan President and Chief Executive Bob Thomas, who left the company last October.

Thomas took control of much of Nissan’s advertising and marketing and surrounded himself with executives who wouldn’t challenge him, the source said. He added that Thomas encouraged experienced employees to take early retirement and reduced the number of Nissan dealers, lessening dealer competition in some areas.

Thomas, now executive vice president of strategic marketing at Fort Lauderdale, Fla.-based Republic Industries Inc., did not attempt to defend himself against the critics. “I have no comment as to those concerns by people,” Thomas said.

Another major problem for Nissan, analysts say, is its ad campaign, featuring the enigmatic “Mr. K” and his Jack Russell terrier, Sato. The campaign has focused more on promoting Nissan as a brand name than on particular vehicles.

Tom Patty, worldwide Nissan account director at TBWA Chiat/Day Inc., said that since the start of the year his agency has been directed to focus 70 percent of Nissan’s advertising dollars on products and 30 percent on promoting the name. Those percentages are reversed from last year.

Patty said Nissan and TBWA Chiat/Day executives would decide late last week whether to feature Mr. K and his dog in future product commercials showing the features of the car in the spot, and flashing on the characters at the end to enhance brand identity.

“We’re absolutely going to keep Mr. K in the 30 percent brand stuff,” Patty said. “The question is whether he would be included in the product stuff or not.”

Despite those changes, Thomas defended Nissan’s past brand-building campaign.

“The idea of the advertising campaign was always to develop something that builds up the brand at the same time as capturing some of the heritage that was lost during the name change from Datsun to Nissan,” Thomas said. “And as such, it was always figured to be a campaign that would evolve over time, and would move between more-or-less product-specific advertising, depending on whether or not there were new product launches.”

Analysts agreed that building up Nissan’s brand recognition through the “Enjoy the Ride” campaign was a smart move, but said it could take years to pay off.

“Even with Mr. K, I think they wanted that to increase sales instantaneously,” said Lincoln Merrihew, who studies new vehicles for Agoura Hills-based J.D. Power and Associates. “It takes years for something to gestate or bear fruit.”

But Sanchez Fair of Nissan said the “Enjoy the Ride” campaign has proven successful with high consumer recognition for the Mr. K character and that the goal now is to apply the campaign to specific vehicles.

“Now we need to communicate what ‘Enjoy the Ride’ means to the Altima owner, to the Frontier owner,” she said.

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