It's safe to say that one key factor for automakers' success is to gain as much market share as possible -- that is, without dishing out huge incentives and sacrificing profits. Nissan (NASDAQOTH:NSANY) is no different, and the automaker wants to increase its share in the critical U.S. market. More specifically, Nissan is aiming for 10% market share in the U.S., which, in a market where a tenth of a percentage point is a big deal, is a big jump from its 7.7% share last year.
However, for Nissan to accomplish this feat, it will have to do something that has entirely eluded the automaker thus far: Break into Detroit's stronghold on the most profitable segment in the U.S. -- full-size trucks.
Nissan hopes its redesigned Titan will do just that, but does it stand a chance?
Good luck, Titan
To emphasize how much of a challenge it has been, and will continue to be, for the Titan to steal market share from Ford Motor Company's (NYSE:F), General Motors' (NYSE:GM), and FCA's, full-size trucks, here are some facts to consider.
In 2014 Nissan sold a whopping 12,527 trucks in the U.S. -- which Ford's F-Series managed to do in only five selling days last month. Furthermore (as you can see in the graph below), despite sales of full-size trucks surging in recent years, without a fresh product to compete with its peers', the Titan has seen its sales decline.
So, with Nissan now redesigning the Titan, does it stand a chance to finally move its sales higher and challenge the segment's major competitors? To better understand the Titan's chances, let's take a look at Nissan's strategy.
What Nissan believes
Nissan believes there is a huge opportunity for the Titan. The company claims that each year 75,000 U.S. consumers move from light-duty pickups to heavy-duty, and an equal amount make the opposite move -- thus, 150,000 consumers are in limbo on what size truck they want and need.
"We have done our homework on the next-generation Titan," said Fred Diaz, divisional vice president of Nissan Sales & Marketing, Service & Parts, Nissan North America, in a press release. "Truck owners told us there's a demand for the performance and torque of a diesel in a capable truck that doesn't require the jump up to a heavy-duty commercial pickup. There is no question that the new Titan will turn heads, and with the available Cummins 5.0L V8 Turbo Diesel, we expect to win new fans and attract buyers looking for this unique configuration."
Because of the number of consumers switching between light-duty and heavy-duty trucks, the automaker feels it can bring a Titan to market with the Turbo Diesel engine that will fill a niche market of consumers and convince them to remain in the full-size/light-duty segment with their product.
Is it a strategy that will work? Color me unconvinced, for a few reasons.
First, Detroit full-size trucks have always been very capable, in terms of performance, and the 2014 Silverado and 2015 F-150 have improved their fuel economy. That means that despite the Titan's redesign and Cummins engine, it isn't taking a giant leap ahead of the competition by any means. This is an extremely competitive segment, arguably the most competitive in the U.S. market -- which shouldn't be surprising, since it's the most profitable segment as well.
Second, the Titan's success is limited because it's pinned into a market niche. General Motors has potentially thrown a wrench in the Titan's strategy with the revival of its previously discontinued midsize trucks: the Chevrolet Colorado and GMC Canyon. Those two trucks could steal serious thunder from the Titan, especially if current Nissan Frontier consumers switch brands to Chevrolet and GMC and would then never step up to the full-size Titan when their buying power later increases.
Third, in my opinion, the redesigned Titan looks fairly similar to a Ford F-150. This could play out in a couple of different ways. On one hand, the Titan could steal some of America's best-selling truck's design credibility, and potentially lure consumers to purchase a Titan instead. On the other hand, without a unique exterior design, the Titan could fail to generate the hype that is typically associated with freshly redesigned vehicles.
Fourth, and perhaps the most difficult challenge facing the Titan, is that Americans are extremely loyal to their truck brands. Oftentimes, you're either a Ford guy or a Chevy guy. The line in the sand has been drawn for decades, and the thought of purchasing a Japanese-manufactured truck never even registers with many U.S. consumers.
Ultimately, despite the Titan boasting a new design for its 2016 model, it seems that even reaching goals that Nissan set way back in 2003 -- 5% market share of the full-size segment, or roughly 100,000 in annual sales -- is far-fetched at this point.