What is America's best-selling car?
You'd be excused if you guessed Toyota's (NYSE:TM) Camry, or Honda's (NYSE:HMC) Accord -- or even Ford's (NYSE:F) sharply styled Fusion. But the truth is -- so far in 2014, at least -- Nissan's (OTC:NSAN.Y) Altima has outsold them all.
What's behind that? For sure, the Altima is a solid entry in the tough midsize-sedan segment. But as Fool contributor John Rosevear explains in this video, there might be a little bit more to the story of the Altima's sudden sales success -- success that might turn out to be expensive for Nissan in the long run.
A transcript of the video is below.
John Rosevear: Hey Fools, it's John Rosevear. So there's an interesting shakeup in the auto sales rankings. In terms of new vehicle sales in the U.S., Ford and Chevy pickups are the top two, year in and year out, that doesn't change.
But third place is where the action is. That's America's best-selling car, and for a while now, that spot has been owned by the Toyota Camry, with occasional visits by the Honda Accord. But so far in 2014 we have a different leader, through the first two months of the year Nissan's Altima is America's best selling car.
That's kind of a surprise.
It's not a surprise that the Camry has fallen a bit behind, the Camry has been losing market share for the last year or so, not because it's bad but because its competitors have gotten better. We saw the Honda Accord gain ground last year, we saw Ford's Fusion gain quite a bit of ground, and the Altima has also done quite well too.
But Altima sales weren't all that great at this time last year, they really took off after Nissan made some big price cuts last May. Nissan has also boosted its incentives. Data from TrueCar shows that Nissan's overall incentives, not just on Altima but across its line, its overall average incentives per vehicle were higher than any other automaker other than then Detroit Three, and the Detroit automakers have higher incentives because they're all big players in the pickup market and incentives are traditionally big in that market. So Nissan's incentives really have been quite a bit higher than we'd expect for a Japanese automaker recently.
And their focus is definitely on the Altima, sales analyst Timothy Cain of the GoodCarBadCar blog points out that about 30% of Nissan's total sales volume in the U.S. in February was Altimas, compared to 21% for Toyota with the Camry. And while Toyota is booking amazing huge profits thanks to the favorable shift in exchange rates between the dollar and the Japanese yen that has made each dollar worth more in Japan, Nissan seems to have chosen to spend that advantage on gaining market share.
Nissan's net profits last quarter were just $825 million dollars, compared to Toyota's $5.1 billion dollars, billion with a "b", and their margins -- Nissan's margins -- were the lowest of any Japanese automaker, lower than Ford and GM too, by quite a bit. So at least for the moment Nissan has America's best-selling car, but I wonder if they've kind of made a devil's bargain here. We'll see what their profits look like this quarter, but I'm betting they're not going to be strong. Thanks for watching, and Fool on.