Nissan plans to prove doubters wrong with luxury marque launch

Nissan is taking on Toyota-owned Lexus with the launch of its luxury marque Infiniti across Europe next year. The brand is hugely popular in the US, where it was established in 1989, but the UK car industry seems unconvinced that it can replicate that success on this side of the Atlantic.

Nissan Europe is moving its general manager for brand and advertising, Bastien Schupp, to the new role of European marketing director for Infiniti ahead of its European launch in September 2008 (MW last week).

The marque’s US line-up includes luxury sports utility vehicles and executive saloons, and it saw sales jump 88% to 136,401 between 1999 and 2005. However, experts point out that Europeans have very different attitudes to their US counterparts when it comes to buying cars.

Toyota launched Lexus with great success in the US in 1989, but the brand’s arrival in Europe a year later was less spectacular. Lexus GB director Steve Settle says: “US consumers are not so brand-driven and are more open-minded when it comes to new products.”

Building foundations
While Cadillac, General Motors’ luxury brand that is being rolled out globally, has struggled – selling just 3,300 cars in Europe last year – Lexus is beginning to build the foundations of a business in Europe. Its UK sales increased 40% from 10,548 in 2005 to 14,691 last year, according to the Society of Motor Manufacturers and Traders. But the brand’s unaided awareness last year was only 12% in the UK and Settle admits Lexus is still “a long way away” from its premium German competitors BMW, Mercedes and Audi. He adds: “That’s the challenge. If you are a new brand coming into Europe, it’s very difficult to make ground on those manufacturers.”

Lexus is targeting sales of 65,000 in Europe by 2010 – it sold about 50,700 last year – but that is just 20% of the number it sold in the US in 2006 and less than 10% of what BMW or Mercedes sold in Europe.

Warning signs
Nissan has spent €500m (£340m) on “Europeanising” its Infiniti range, with better interiors, improved handling and a diesel alternative. But former Toyota GB commercial director Mike Moran, who now runs motoring consultancy The Automotive Partnership, says the fact that it has taken Lexus so long to establish itself in Europe should act as a warning to Nissan.

“Lexus is a fantastically respected brand in the UK and has class-leading customer service, but it has still struggled to steal big-volume sales from BMW, Mercedes and Audi,” he adds. “The reason for that is that in Europe it takes a long time to build brand equity and heritage, particularly in the luxury goods market.”

Moran also questions the wisdom of launching a low-volume luxury brand in Europe at a difficult time for Nissan as a business. In February, it admitted it would fall short of its performance targets and report its first profit drop since Carlos Ghosn became chief executive in 1999.

Simon Pride, board account director at advertising agency RLA Group, who used to run the pan-European Volvo account at Euro RSCG Fuel, believes Lexus will have helped “soften people up to the idea of buying a luxury car from the Far East”. But he adds: “Toyota is one of the biggest players in the car industry – the same cannot really be said of Nissan. It doesn’t have the weight behind it to make the premium position credible.”

Infiniti may be the jewel in Nissan’s crown in the US, but it looks like Europe, as countless other manufacturers have found over the years, will be a tougher nut to crack.

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here