Who sells the most units in North America?

2015-Nissan-Altima

The American culture always likes to declare winners (and mention the losers with a sad smile). We love winners and so tend to produce lists. Coming at the top usually earns a big cheer except, perhaps, when foreign brands beat American brands. Why, we ask, can we not do better? When it comes to the motor manufacturing industry, the lists for the last twenty-five years have shown Ford edging out Toyota or Honda as the winner. For those obsessive people who care about the losers, Nissan tended to be a distant third among the foreign brands. The other American manufacturers do not sell in the same volume as the Japanese manufacturers. Still, we sigh happily, Ford continues to win with record sales for the Escape, Fiesta, and Fusion, and the F-series pickup as the top-selling model.

The competition among the Japanese is beginning to change the market landscape. Now thanks to the launch of new models, Nissan is threatening to overtake Honda (which was the first Japanese company to establish factories in America) and claim second place among the foreign brands. If it can build sales, it will be the first time since 1987 that it will beat Honda and take a 10% share of the American market — it’s current share is 8.6% with Honda on 9.1% (for the record, Toyota has 15% of the market).

Why is the market share changing?

When Honda launched its range in America, it was immediately recognized as being a high-quality manufacturer. That’s no longer its brand image. Indeed, despite a redesign of the Accord and Civic, neither would be considered a style-setter. The Nissan story is the exact opposite. When it first launched, its designs were considered boring and unimaginative. Although they were reliable, buyers did not buy them to be seen in them. Today, the Infiniti brand is considered stylish with the Altima Sedan, Sentra and Rogue crossover impressing. Indeed, Honda currently has only sixteen models in its product range, whereas Nissan has diversified with twenty-seven models.

Why is this important to Honda and Nissan?

The answer, as always, is about the bottom line. Lists are useful indicators, but the stock markets want to see improving performance and adequate dividends. Taking America and Canada together, the revenue represents 41% of the global revenue generated by Honda. Nissan earned 49% of its total revenue from North America. So the more Nissan can build sales in those markets, the better its overall performance will become. Naturally, Honda accused Nissan of offering discounts and dealer subsidies to drive up market share. Even if this is true (which it may not be), it all comes down to bottom line. If the sales volume rises, profits rise even though the margin per unit may be reduced. But at some point. both manufacturers will have to judge whether to compete on price. Sacrificing maximum profit is only sustainable for relatively short periods of time given the volatility in the currency exchange rates.

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