Nissan betting on new Xterra SUV to revitalize brand

SMYRNA, Tenn. - Nissan Motor Co. Ltd. unveiled at its assembly plant here the new Xterra small sport utility vehicle, which the Japanese automaker hopes will revitalize its poor brand image.

"The Xterra is a home run for Nissan," Minoru Nakamura, president of Nissan's North American operations told employees and state officials at a ceremony to celebrate the assembly of the first Xterra.

The sport utility vehicle (SUV), which will sell for between $18,000 and $25,000 when it hits dealer showrooms in early June, will generate customer traffic in the United States for the struggling Japanese automaker, auto analysts said.

"It could do wonders for Nissan in helping the image problem," Nextrend analyst Wesley Brown said. "This could be the first image vehicle for the brand and hopefully begin a string. It's a desperately needed vehicle."

Xterra will attract buyers ages 34 and younger to Nissan's 1,150 U.S. dealers, a group Nissan has failed to draw in the recent past with its high-quality, but boring vehicles, Brown said. Once there, the automaker hopes those shoppers will look at its other vehicles.

Nissan executives expect the plant, which employs 6,000 people, to make 55,000 Xterras this year and as many as 75,000 to 80,000 in subsequent years. The national advertising campaign for the Xterra, built off the Frontier pickup truck platform, will begin this week.

The small SUV segment in the United States grew from more than 139,000 in sales in 1995 to almost 367,000 units last year, according to Autodata Corp. Nextrend projects sales will surge to more than 700,000 by 2003 as more competitors enter the market. Despite the strength of the segment, analysts wonder whether Nissan is too optimistic. But they do not question Xterras expected success.

Xterra will compete with Honda Motor Co. Ltd.'s CR-V and Toyota Motor Co.'s RAV4, as well as DaimlerChrysler AG's Jeep Cherokee, analysts said.

However, it also will steal 15 percent or more of its sales from the low-end version of the Nissan Pathfinder SUV, before that vehicle's redesign in 2002, Nextrend's Brown said.

"They're making a sport utility out of a pickup truck," sniffed Marty Levine, DaimlerChrysler vice president of marketing for Chrysler, Plymouth and Jeep brands.

While he believes Xterra will affect Honda and Toyota's products more, Levine is taking nothing for granted. "Saying you're not scared of the competition is a very naive way of doing business."

The Xterra will be available with a V6 engine, a more powerful option to the standard four-cylinder engine offered by by its Japanese competitors, the RAV-4 and CRV.

A four-door, four-wheel drive Xterra with automatic transmission will sell for about $22,000 including delivery charges, Nissan said. But 70 percent of all models will less than $20,000, company officials said.

BY BEN KLAYMAN
REUTERS