Nissan’s Teana Tests Chinese Willingness to Buy Japanese

After protests erupted across China last year over Japan’s nationalization of disputed islands, sales of Japanese-branded cars there plummeted. Nissan (7201) Motor Co.’s prescription for winning back Chinese drivers: a quieter ride and better gas mileage.

Nissan introduced its new Teana sedan on Feb. 26 in the southern Chinese city of Guangzhou, the site of riots that saw Japanese businesses looted last year. The company is counting on the car to revive sales in its biggest market, and as the first major new model by a Japanese automaker since the protests erupted last September, the Teana will serve as a barometer for sentiment toward Japanese brands.

The revamped Teana “is critical in helping Nissan regain the momentum lost after the islands crisis,” said Bill Russo, president of auto consultancy Synergistics Inc.

The redesigned Teana claims better fuel economy than rivals such as the Volkswagen Magotan, Toyota Camry, Honda Accord and Chevrolet Malibu. It features redesigned rear suspension, rear- view monitor cameras, and seats inspired by spaceship technology that the company says promise less fatigue on long drives.

Designed by a team led by Nissan’s joint venture with Dongfeng Motor Group Co., the new Teana is 18 millimeters (0.7 inch) longer, 35 mm wider and 15 mm taller than the previous version and has more interior space than the Camry and Magotan.

More Chrome

To attract the Teana’s target demographic of a 34-year-old married man with a young child, Nissan gave the car a bolder front grille and used more chrome than is available on the Altima, a similar U.S. model that shares many parts. Since Chinese drivers value a quiet ride, Nissan beefed up the soundproofing and raised the car’s height for rougher roads.

Nissan also stiffened the feel of its door knobs and engineered its door panels to give off a solid sound when tapped, as the company says that’s how many Chinese buyers assess safety and quality.

“This is the first time we have seen a flagship model designed for this market with a very clear focus on the Chinese customer,” Andy Palmer, Nissan’s executive vice president in charge of global product planning, told reporters in Guangzhou.

Nissan expects buyers to pay a premium for the new Teana. Starting at about 190,000 yuan ($30,500), it’s roughly 4,000 yuan to 28,000 yuan more expensive than the base models of the Accord, Camry and Malibu, according to data from auto-pricing website Yiche.com.

Better Mileage

That extra cash will buy gas mileage of 7.3 liters per 100 km with a 2.5-liter engine, versus 9.5 liters previously for the base model. That compares with 8.4 liters for the Accord and Camry, and 8.0 liters for the Malibu, according to company specifications compiled by Bloomberg.

Nissan, the biggest Japanese carmaker in China, is expecting a jump in first-year sales with the new Teana. Sanford C. Bernstein says it’s the most profitable of the dozen-plus models the automaker sells in the country. The Teana accounted for 12 percent of last year’s sales for the Dongfeng-Nissan joint-venture.

The last time the Teana was redesigned, in 2008, sales surged 54 percent after dropping 17 percent the previous year. The trend was repeated in 2012, when deliveries of the Teana plunged 42 percent to 90,072 units, exacerbated by nationalist tensions and competition from the Camry and Magotan, both redesigned in 2011. The Teana’s slump was the worst among the 10 top-selling midsize sedans in China, according to researcher LMC Automotive.

‘Tough Time’

Any first-year boost may be tempered by lingering anti- Japanese sentiment. Nissan says its overall China sales for the first two months are about 20 percent lower than the year- earlier period. The country last year accounted for about a quarter of all of Nissan’s vehicle sales.

“A single model isn’t enough to solve the problem entirely,” said Koji Endo, managing director at Advanced Research Japan. The Teana “should be a big help, but probably even with this new model, Nissan will continue to face a tough time there.”

Researchers at Bernstein say midsized sedans like the Teana are becoming a tougher sell in China as more consumers choose SUVs, and as German premium brands such as Audi introduce entry- level models.

“Even before the islands crisis the Japanese were suffering sliding pricing and profitability,” Max Warburton, an auto analyst at Bernstein in Singapore, said in a Feb. 26 report. Despite Nissan’s expectation of a substantial boost this year in China from the new Teana, “we’re more cautious.”

‘Getting There’

Nissan earlier this month reported that third-quarter profit fell a more-than-estimated 35 percent to 54.1 billion yen after sales tumbled in China and new models trailed competitors in the U.S. Its shares have risen 16 percent this year, versus a 19 percent gain for Toyota Motor Corp.

Nissan had the biggest sales decline in China last year among the three leading Japanese carmakers, with deliveries off 5.3 percent in 2012, versus drops of 4.9 percent at Toyota and 3.1 percent for Honda. (7267)

A rebound in Chinese demand would help the automaker regain ground after sales of the new Altima, its bestseller in the U.S., trailed the Camry and Honda’s Accord.

In China, “the situation is getting better, it’s getting normalized,” Ghosn said on Feb. 26 at an event near the company’s headquarters in Yokohoma, Japan. “We’re getting there.”

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net; Ma Jie in Tokyo at jma124@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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