Nissan’s $9,990 car requires a little sweat and elbow grease
In tough times, Nissan Motor Co. is hoping less is more.
On Friday, the Japanese carmaker said it would begin selling a cut-rate version of its Versa sedan in the U.S. for $9,990 -- more than $1,000 less than the cheapest new car currently sold in America.
The frills-free Versa -- which is made in Mexico and will be available starting Nov. 18 -- will come without power windows or air conditioning and will be the only new car available in the U.S. for less than $10,000.
The vehicle, selling for $3,000 less than current Versa models, could serve as a bellwether for the kinds of car choices American consumers make in a tough economy: Will they opt for the feature-laden but pricier subcompacts that many automakers are now betting on, or will they pick the most affordable car?
“Automakers seem to be trying to do two things: bring in vehicles in the lowest price range while also trying to deliver cars with some level of nobility and class and extras,” said Alexander Edwards, president of the automotive division at marketing consulting firm Strategic Vision. “The question is, how many people are going to choose a vehicle that doesn’t have air conditioning?”
Nissan contends that the credit crisis -- which has gutted consumer confidence, dried up lending and driven down industry sales 13% this year -- is shifting attention to low-priced vehicles.
The cheapest car now sold in the U.S. is the $11,070 Hyundai Accent, so the stripped-down Versa may seem like a blue-light special.
“A sticker price under $10,000 is certainly appealing to customers in an economy where people don’t have money anymore,” said Robyn Eckard of Kelley Blue Book.
Al Castignetti, head of U.S. sales for Nissan, said the new Versa was designed to compete with the secondhand market.
“Our thinking was to be able to offer a vehicle that offers a used-car price with the reliability of a new car,” he said.
The car will have a 1.6-liter engine, rather than the 1.8 liters offered on current Versas, and will get 34 miles per gallon on the highway, compared with 33 mpg currently.
That’s a completely different direction than the one taken by automakers such as Ford Motor Co. and General Motors Corp. Both plan to bring to the U.S. fuel-efficient small cars stuffed with options like leather seats and navigation systems, in hopes of making them profit centers as consumers move away from high-margin sport utility vehicles.
GM was the last automaker to offer a sub-$10,000 car in the U.S., selling its entry-level Aveo for $9,995 two years ago, according to Kelley. But it has since discontinued that version of the car and raised the sticker price to $12,625.
In September, GM said it would replace its low-priced Cobalt compact with the Cruze, a fancier product.
“We’ve been more in the [higher-priced] camp,” said GM spokesman Terry Rhadigan, who downplayed the idea that Aveo pricing could fall in response to the new Versa. “We think the pricing we have is the sweet spot for the market.”
In the rest of the world, carmakers are mostly taking the low (price) road.
In India, where local company Tata is planning a $2,500 car, Ford offers a sedan that sells for $9,000, its least expensive car in the country. In Japan, Nissan sells a micro-compact called the Pino that practically fits in the Versa’s trunk, for close to $8,000. And GM is preparing to sell a subcompact called the Beat that could come in well below $10,000. But the company has no plans to bring it to the U.S.
“The real small cars will remain a niche market in the U.S., while most of the rest of the world is focused on small-engine cars with low price points,” said Jesse Toprak, a sales analyst at Edmunds.com.
For Nissan, the sixth-largest carmaker by U.S. sales, the Versa has been a relative bright spot in a relatively lackluster year. Through September, the model’s sales are up more than 13% compared with the first nine months of 2007, while Nissan’s overall U.S. sales are down 3.4%. In September, Nissan’s sales fell 37% compared with a year ago.
According to Castignetti, the company had planned to bring in the basic version of the Versa for some time. The smaller engine is already used in foreign markets, including Ireland.
“Then the economy went south and because of that, the pricing of this car couldn’t be more perfect,” he said.
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