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Nissan has been running out of gas since 1985, about the time Halberstam was writing. The company's U.S. sales that year topped 830,000, and the goal was to pass Toyota within a year. Nissan never came close. Its sales in the U.S. have shrunk some 25% since then, and the company has slid to a distant third, behind Toyota and Honda. The story is much the same in Asia. Now, nearly two years into Asia's slump, the automaker's share in Thailand has been almost halved, to 9%, despite major investments in new plants.

Nissan ignored supply and demand at home, too. In the late 1980s, management shelved a restructuring plan in hopes that the company's fortunes would be bolstered by the surging Japanese economy. When the bubble burst in the early 1990s, so did Nissan's profits. In 1993, the company took its first loss and two years later became the first car manufacturer to close a factory in Japan since the end of World War II. Last December, the government-run Japan Development Bank issued $708 million in loans to Nissan. That brought resounding criticism--and inevitable comparisons to Chrysler Corp., which was bailed out by the U.S. government with $1.2 billion worth of loan guarantees in 1980.

The stallout in the U.S. market is typical of Nissan's global difficulties. Last year just about anything with four wheels and a little styling moved off dealers' lots. Yet Nissan's sales dropped off 14.7%, and the company lost money. The firm's managers somehow forgot a golden rule in the auto business: profits are only as good as the last hot product in a fast-changing cycle. The Maxima, Nissan's flagship sedan since the 1980s, is a perennial critics' favorite, but even its fans say it needs a face-lift. So does the Infiniti luxury series. The Altima, Nissan's affordable sedan (about $17,000), is chubby, boring and no match for its nemesis, the Accord, or the new Volkswagen Jetta. This year Nissan's only brand-new offering is the Xterra sport utility vehicle. Hot, say critics, but alone. "They've tarnished their image," says Bill Seltenheim, an analyst with Autodata in Woodcliff Lake, New Jersey. "Everyone knows if you want to buy a Nissan, all you have to do is wait for the next incentive program."

The problem: instead of allowing designers to work their magic, bureaucrats in Tokyo have been dictating, Henry Ford-like, what is good for the customer. The lesson, of course, is that in the 1920s Ford almost bankrupted his company that way. Says J. Ferron, one of the auto industry's leading consultants: "There have been times when nobody even bothered to ask whether green cars were selling before they were loaded onto ships."

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Daily

March 8, 1999

Merger Mania
The deals will keep on coming

Viewpoint
Change is not entirely foreign to Japan


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