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Nissan Hopes New SUV, Redesigned Cars Give Sales a Lift


SMYRNA, Tenn. — The Nissan Xterra sport-utility vehicle rolled off the line Monday at a factory outside Nashville, arriving as the first in a series of new and redesigned cars and trucks on which Nissan Motor Co. is pinning hopes of revitalizing its fortunes in the key North American market.

The No. 2 Japanese auto maker, saddled with debt and hurt by a 30% decline in U.S. market share in the last five years, has a huge job ahead.

It must reposition itself as a brand for adventurous, dedicated drivers and shed its recent image as a car maker with ho-hum vehicles that sell because of big discounts and factory rebates. And with the Xterra and the other vehicles in the pipeline, it must succeed in efforts to slash development and production costs by using shared platforms and parts and new manufacturing methods.

Industry watchers say the Xterra is a critical vehicle for Nissan, whose U.S. sales dropped almost 16% last year to 557,879 cars and light trucks. But success could come at an unintended price, as Nissan already sells the Pathfinder SUV and is pricing the new truck, which is only slightly smaller, at thousands of dollars less.

"Nissan says it won't cannibalize from Pathfinder, but it will take some of those buyers," said analyst George Peterson of AutoPacific Inc., a marketing and consulting group in Santa Ana.

The new SUV is scheduled to hit the market in early June, at the same time the redesigned Maxima passenger car goes on sale. But few analysts view the Maxima as a car that can bring shoppers into Nissan dealerships. For now, that job belongs to the Xterra.

Jerry Benefield, chief executive of Nissan Motor Manufacturing Inc., said the "back-to-the-basics" SUV, with a truck frame, stiff ride and a distinctive lack of leather and wood trim, is aimed at the kind of young--or at least young-in-attitude--buyers who have long been avoiding Nissan showrooms. It will sell for $18,000 to $25,000.

"It has the rugged look that Nissan vehicles once were noted for but that has been lost in recent years," said Wes Brown, an industry analyst with Nextrend in Thousand Oaks. "Nissan is lacking a strong image in a market where image is everything, and Xterra could help get it back."

With the Xterra, Nissan is shifting its emphasis to focus on the niche groups that increasingly determine success in the car wars.

After the new SUV, Nissan plans to reintroduce its famed Z-car as a thoroughly modern year 2000 sports car and will bring out a radical sport-utility truck, or SUT, as a 2001 or 2002 model. The latter is a five-seat SUV whose cargo area has been replaced by a short pickup bed that can be accessed from the passenger cabin through a flip-up rear door.

The new products aren't a result of Nissan's recent rescue by French auto maker Renault, which has agreed to invest $5.4 billion in return for a 37% stake. Although the cash and the ability to share engineering and marketing expertise with Renault will certainly help Nissan, the company's U.S. strategy is the result of planning that began several years ago.

"One reason Renault was attracted to us despite the corporate debt was that it was aware that we have some hot products coming," said Jerry Hirshberg, president of Nissan Design International in La Jolla. "We have a new color on our palette, and it's called French, but they won't impact our autonomy."

Hirshberg believes the Xterra's styling will rekindle interest in Nissan products and demonstrate the company's ability to squeeze the most from its lineup. The SUV was built on the Frontier pickup platform and shares most of its major parts from the front doors forward.

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