Nissan Takes Advantage of the Weak Yen Threatening Detroit’s Price Discipline image

Nissan’s strategy to increase its US market share has prompted the auto industry worry that this will lead to a price war which will affect the progress made since the recession ravaged auto sales.

Nissan has already cut prices on seven models and increased incentives, a move which made the automaker’s US sales jump 25% last month, the time the industrywide gain. The Altima family sedan had its price cut by $850 and saw sales increase 41%, surpassing Ford Fusion and almost reaching the Honda Accord.

“So far, Detroit has responded by having more competitive products that are putting some pressure on other brands that just didn’t exist before,” said Jeff Schuster, an analyst with researcher LMC Automotive in Troy. “Now we’re seeing how the other brands are dealing with it.”

Nissan is the first automaker which takes advantage of Prime Minister Shinzo Abe’s weakening yen strategy aimed at improving Japan’s economy. Yen’s 15% drop compared with the US dollar offers Japanese car makers an extra $1,500 per vehicles which they can use to reduce costs or give more features at the same time keeping the prices even.

Nissan’s marketing moves “strike me as a scorched earth policy of going for market share and sales volume at seemingly all costs,” said Michelle Krebs, a Royal Oak, Michigan-based analyst with auto researcher

Source: Bloomberg