Leaving Zen In The Dust
Is the tortoise of the luxury car business finally giving the hares a run for their money? For years after its launch in 1989, Nissan Motor Co.'s (NSANY ) Infiniti division was an also-ran. Now, through a combination of bold product launches and a rethinking of the way the brand is positioned, Infiniti has delivered the largest sales gains of the major automotive nameplates. Infiniti's sales leapt 35% last year, to a record 118,000 units.
Infiniti still sells fewer than half as many cars as rivals BMW and Toyota Motor Corp.'s (TM ) Lexus division. But Nissan's luxury line is now profitable and a critical part of Nissan President and CEO Carlos Ghosn's goal of expanding Japan's third-largest carmaker. "We will be in every segment in each geographical region, starting with high-profit segments," Ghosn said at the Detroit auto show in early January.
INSPIRATION GAP. In many marketers' minds, Infiniti will always be associated with the company's "rocks and trees" campaign. That ad blitz successfully built awareness of the brand when it launched 15 years ago. The early ads never showed Infiniti's cars. Instead, magazine readers and TV viewers saw serene images such as a pebble dropping into water or a lone tree surrounded by mist. They suggested that driving an Infiniti produced a Zenlike connection between man and nature. New dealerships featured a salesman-free "contemplation area," where customers could ponder purchases behind Japanese screens.
But if the rocks and trees got curious people into the showrooms, they raised expectations that the cars rarely came close to fulfilling. The company's flagship Q45 sedan delivered a lot of power for the money, but most of its cars were uninspired. By the end of the 1990s, Infiniti's lineup included the I35 sedan and QX4 sport-utility vehicle, little more than gussied-up versions of regular Nissans.
Enter Ghosn. When Renault, where he was executive vice-president in charge of car development and manufacturing, bought control of Nissan in 1999, the carmaker was loaded down with debt. Ghosn considered killing Infiniti, which had never turned a profit. But spotting some interesting cars in development, he decided to stay the course for a while longer.
Good thing he did. The G35 sport coupe and sedan, launched in 2002, were instant hits. They combine clean, modern design with sporty performance at prices competitive with the BMW 3 Series, the Audi A4, and the Lexus IS 300. The $28,000 G35 was named Motor Trend's 2003 Car of the Year. Infiniti followed up with the head-turning FX SUVs, whose low-slung bodies combine a sport-ute's roominess with the drivability of a sports car. "We're getting a lot of BMW, Lexus, and Mercedes (DCX ) trade-ins that we never used to see before," says Rick Cowart, general manager of Sewell Infiniti in Dallas. Infiniti accounted for 15% of Nissan's U.S. sales last year, up from 10% in 2001.
DRIVING THE MESSAGE HOME. Next month, Infiniti rolls out a new full-size SUV, the $48,000 QX56, that will go head-to-head with the Cadillac Escalade and Lincoln Navigator. Later this spring, it will unveil a concept expected to replace its middle-of-the-line M45 sedan, a sportier, rear-wheel-drive vehicle with a sweeping exterior that should stand apart from other $40,000 sedans.
Now that it has gotten the cars right, Nissan is retooling its advertising to emphasize the brand's new focus on performance and design. The trick has been to find an alternative to the cosmic rocks-and-trees come-on and recent years' mundane recitations of car features. The answer: portray Infiniti as the car that baby boomers dreamed about as kids. Thus, an ad for the FX lists things that seemed a stretch back when boomers were pip-squeaks: "Vinyl will never be replaced. A band from Liverpool will never make it big in America. Never? They said an SUV would never have the heart of a sports car."
With its stronger brand positioning, Infiniti should be able to spend less on ads yet still bang its message home. Indeed, despite its higher sales, Nissan will keep Infiniti's overall ad budget flat at an estimated $250 million this year. In time, some industry watchers think the brand could give BMW a run for its money. "No one has been successful in positioning against the blend of style, performance, and youthfulness that BMW embodies," says Susan Jacobs, a consultant with Jacobs & Associates. "Infiniti has the best chance."
Infiniti dealers, whose average profits per dealership hit a record $1 million in 2003, are in the process of remodeling showrooms. The Zenlike contemplation areas are out. No rap against cosmic bliss, but these days there are a lot more cars worth showing off.
By Christopher Palmeri in Los Angeles