The traditional order among Japanese manufacturers that sell vehicles in America has been Toyota Motor Corp. (NYSE: TM) in the top spot and Honda Motor Co. Ltd. (NYSE: HMC) in second place. Large model lines and quality reputations have helped each company compete with the Big Three U.S. car companies. The order has been shaken up recently, as Nissan has taken the number two position.
Nissan sold 115,360 cars and light trucks in the United States during February, up 16%. Honda sold 100,405, down 7%. February sales across all manufacturers that sell vehicles in America were flat last month at 1,193,872. This allowed Nissan to bump its market share to 9.7%, up from 8.3% in the same month last year. Sales of Nissan’s Altima rose 11% last month, which put it ahead of the traditional leader, Toyota’s Camry, some signal of how well Nissan is doing.
Ironically, Nissan often does not do as well as Toyota and Honda do in many car quality measurements. In the J.D. Power 2014 Vehicle Dependability Study, Nissan ranked below the industry average in problems per hundred vehicles. Honda and Toyota were each in the top ten. Lexus, the Toyota luxury line, ranked in first place in the J.D. Power study. Honda’s luxury line Acura ranked fourth overall.
One reason for Nissan’s strong February could be its pricing strategy. According to Kelley Blue Book’s New Car Transaction Pricing study for last month, Nissan’s average transaction price was down 2.5% from February of last year to $27,906. Honda’s pricing went the other direction. The research firm reported:
“In particular, Honda is seeing the greatest increase this month, thanks to strong numbers from its Acura brand, including the MDX, which jumped 10 percent in February,” said Karl Brauer, senior analyst for Kelley Blue Book.
Honda’s average transaction price was up by 3.9% compared to February of last year to $28,318. Both Honda and Nissan were below Toyota’s $30,778, which was up 3.1% year-over-year last month. Across the industry, car transaction prices were up 1.9% to $32,160 for the same period. And KBB expressed concern about Nissan’s pricing, compared to the balance of the sector. Commenting about Nissan prices in February compared to January of this year:
“Nissan continues to decline, down 2 percent from last month and nearly 3 percent year-over-year,” said Alec Gutierrez, senior analyst for Kelley Blue Book. “The brand’s top-selling Altima has fallen nearly 4 percent since January 2014, and the Rogue also took a small hit in prices, down 1.3 percent month-over-month. Each of these vehicles participate in fiercely competitive segments which has kept prices in check.
It may be that what Nissan took from Honda in market share, it has paid for in price and probably profit margin.
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