Nissan Gears Up to Outrun Honda

TOKYO—The head of Nissan Motor Co.'s operations in North America has a clear objective: move ahead of rival Honda Motor Co. as the No. 2 Japanese automotive brand in the U.S. market.

Nissan, whose U.S. sales in November grew 19 percent, aims to surpass rival Honda as the No. 2 Japanese brand in America, reported The Wall Street Journal.

"I can't see any excuse for not overtaking Honda in the U.S. market," Nissan Executive Vice President Colin Dodge said in an interview earlier this week.

Noting that Nissan outsells Honda everywhere the two brands compete globally except the U.S. and Thailand, Mr. Dodge said targeting his Japanese rival is crucial to Nissan's quest to boost its U.S. market share to 10 percent from the current 8 percent.

"I find it unthinkable that Nissan won't be at 10 percent of the market," he said. "It's just a matter of when."

Honda's U.S. market share has fallen to 9.1 percent so far this year, compared with 10.6 percent at this time last year. Toyota Motor Corp. is the leading Japanese auto brand in the U.S., with 12.6 percent of the market.

As it is for Honda, the U.S. is a key market for Nissan and second only to China globally. Nissan's sales in the U.S. rose 18 percent to 908,570 vehicles last year, compared with a 7 percent U.S. sales gain by Honda to 1.2 million vehicles. Nissan said Thursday that its U.S. sales in November increased 19 percent from a year earlier to 85,182 autos amid strong demand for the company's Rouge compact sport-utility vehicle and Frontier pickup truck.

Nissan has high hopes for growth in the compact segment that Honda dominates in the U.S. with its Civic model. The latest generation of that Honda vehicle has received negative reviews for poor handling and substandard quality, prompting questions about whether the Civic will remain the top-selling compact in the U.S.

Honda President Takanobu Ito acknowledged the cool reception for the new Civic on Tuesday, telling reporters in Tokyo that he took personal responsibility for the problematic launch. "There are mixed opinions of views about the Civic in the U.S. market," Mr. Ito said. "I believe that ultimate responsibility rests with me."

People familiar with Honda's plans say it will likely pull forward a midcycle refresh of the Civic for the 2013 model year, which goes on sale next fall. Normally, such face-lifts don't occur until two to three years after a launch.

The Civic's problems signal opportunity for other compact vehicles, such as Ford Motor Co.'s Focus and Hyundai Motor Co.'s Elantra. Mr. Dodge said that Nissan also wants a larger slice of that market with its latest-generation compact, the Versa.

"Nissan's never been represented in that segment with a market share or profit base up to our potential, so we are expecting a lot from our new Versa," the British-born executive said.

Mr. Dodge added that he wants the car, which is made at a Nissan plant in Mexico, to grab 10 percent of the compact market "within two to three years," up from the high single-digit percentages currently.

Nissan also plans to upgrade the engine in its Titan full-size pickup truck and seek to double that vehicle's U.S. sales, he said.

In a sign of Nissan Chief Executive Carlos Ghosn's confidence in Mr. Dodge, he is in charge of all regions globally except China and Japan. In June, the Nissan board member added North, South and Central America to his existing regional responsibilities for Africa, Europe, India and the Middle East.

Mr. Dodge, whose first automotive job was as a night-shift manager in the former Rover Cowley plant, joined Nissan in 1984 and spent the next 26 years at the company's U.K. operations. In 2007, after leading the auto maker's U.K. supply-chain management, he was named a global senior vice president in charge of emerging markets, including China.

In addition, CEO Ghosn named Mr. Dodge "chief recovery officer" amid the onset of the global financial crisis in 2009, a year when the company's world-wide sales slid 9.4 percent. Mr. Dodge's title was switched to global performance officer earlier this year after Nissan's world-wide sales rebounded in 2010, rising 22 percent to 4.1 million vehicles.

"Ghosn takes the strategy and I try to relieve him of the grubby details of getting the job done on a daily basis. It seems to work quite well," Mr. Dodge said.

Among the senior executive's goals for the U.S. is an improvement in customer service and inventory control. He said that U.S. dealerships might be encouraged to use Apple Inc.'s iPads, something that Nissan has done successfully in Mexico.

Mr. Dodge wants to drastically cut the number of cars sitting in lots and in transit in the U.S. by "pushing" hotter products instead of waiting for orders to "pull" them to showrooms. Stockpiled inventories in Europe have been nearly eliminated for models such as the Qashqai, a crossover vehicle sold as the Rogue in the U.S., he said.

They "go straight from our factory to our dealers, as if they were still warm" from the assembly line, Mr. Dodge said, adding that the streamlining has improved free cash flow and improved relations with Nissan dealers.

If implemented in the U.S. and elsewhere, Mr. Dodge said the strategy could boost global operating profit as much as 1 percent. As part of Nissan's midterm plan, the company has targeted raising its operating-profit margin to 8 percent by early 2017 from 6.1 percent in 2010.