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Nissan to Unveil Luxury Car Line, Dealer Network

July 22, 1987|JONATHAN PETERSON | Times Staff Writer

Squeezed by lower profits and fierce competition among economy models, Nissan Motor Corp. is planning to set up a new dealer network to launch a line of luxury cars, sources in the automobile industry said Tuesday.

The Japanese auto maker declined to confirm the reports, but has scheduled a press conference for this morning to make a "significant announcement."

According to one source close to Nissan, the company will announce a new line of upscale models designed to compete with such European cars as BMW, Volvo and Mercedes-Benz. The cars will carry a new brand name, reminiscent of the way Honda set up its Acura division for a new line of more expensive models in 1986.

Nissan's move is part of an attempt on the part of Japanese auto makers to capture the more profitable, higher-priced portion of the U.S. car market. Toyota is expected to announce shortly its own plans to export a luxury line of cars to the United States for sale during the 1989 model year. "This would be just continued evidence that the Japanese are very serious about moving into the premium car market," said Christopher Cedergren, an analyst with J. D. Power & Associates in Westlake Village.

He added that Nissan and Toyota may come out with sedans and sportier coupes, possibly selling in the $30,000 range and with V-8 engines. Nissan, which may introduce luxury models in 1989, is expected to back them up with strong warranties and promises of customer service.

The efforts are prompted by changing conditions that have made it much tougher for Japanese auto makers to make a profit in the United States. The yen's dramatic increase in value since early 1985 has slashed U.S. profits for the Japanese. Thus costlier "premium" cars have become more attractive to Japanese manufacturers because they yield higher profit margins.

Moreover, South Korea has moved aggressively into the less-expensive end of the market with the highly successful Hyundai, and other developing nations are expected to follow.

A lingering question about the new Japanese strategy is whether status-conscious American consumers will abandon their European cars for such names as Toyota and Nissan, which have become associated with quality and performance, but not glamour.

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