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10 months ago
Nissan Micra update reverses failed downmarket foray
September 29, 2016 / 8:46 AM / 10 months ago

Nissan Micra update reverses failed downmarket foray

3 Min Read

PARIS, Sept 29 (Reuters) - Nissan Motor Co Ltd unveiled a larger, plusher French-built update to its Micra subcompact on Thursday, hoping to win back ground lost by the current model in an ill-judged slide downmarket that alienated European car buyers.

The Japanese carmaker aims to follow up on the success of its larger Qashqai SUV and deepen manufacturing integration with alliance partner Renault SA, which is assembling the new Micra at its Flins plant west of Paris.

Pricing, which was not disclosed in the launch statement, is expected to be well above the outgoing Micra, which starts at 12,000 euros ($13,460).

The new model "shows our intent to compete right at the top of Europe's (subcompact) market", said Nissan Chief Executive Carlos Ghosn, who also heads parent Renault.

With the existing model, launched in 2010, a global design that achieved poor European sales, production was moved to India from Nissan's Sunderland plant, whose third-generation Micra had scored 177,000 deliveries in 2003 - the best year on record.

"They lost it all with the last generation and went completely the wrong way," IHS Automotive analyst Ian Fletcher said. Instead of tackling semi-premium rivals like the Fiat 500, the Micra found itself compared - often unfavourably - with aggressively priced Hyundais.

But the new Micra, announced at the Paris auto show, leaves past mistakes in the rearview mirror.

Besides the larger size and higher quality interior, it adds a six-speaker sound system, automatic emergency braking with pedestrian recognition and driving comfort technology previously unavailable in models below the Qashqai.

Assembly in France serves an additional purpose for CEO Ghosn: advancing the painstaking integration of the 17-year-old Renault-Nissan alliance.

It also satisfies production pledges offered in return for Renault union acquiescence to headcount reductions, wage restraint and flexible hours. Another round of labour talks began this month, aiming to conclude a new pact by year end.

The Micra's competition is fiercer now than in its 2003 heyday, when it claimed 4 percent of European registrations in its size category and 7 percent in the UK, its strongest market. Sales of the new car will peak at around 103,000 vehicles in 2018 for a 3.3 percent European market share, according to IHS forecasts.

Contemporary challengers include PSA's revamped Citroen C3 and the Kia Rio, both making their debuts in Paris.

A weaker pound since Britain's June referendum vote to leave the European Union poses an additional profit and pricing challenge for imported vehicles.

But Nissan's large-scale UK production of other models - including the Qashqai - could give the Micra an edge over rivals, analysts say.

"Nissan overall is less exposed because its UK production offers a bit of a natural hedge," said Stuart Pearson of Exane BNP Paribas. "It can use the relative gains on its UK-built cars to help certain others." ($1 = 0.8916 euro) (Editing by Matthew Lewis)

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