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Last Updated: Thursday, 6 March 2008, 07:45 GMT
Nissan launches luxury brand in Europe
By Jorn Madslien
Business reporter, BBC News

Infinti FX
We are up against the best in the automotive industry, bringing a premium brand to the home of premium brands
Brian Carolin,

The arrival of a new Japanese luxury car in Western Europe has been celebrated at a glitzy launch party on the sidelines of the Geneva motor show - two years after its market entry into Russia and two decades after its North American launch.

The world premiere of the Infiniti FX50 sports utility vehicle was the first yet by Nissan's luxury subsidiary outside its main US market.

The launch was designed to attract the attention of European buyers who would normally opt for an Audi, a BMW or a Mercedes, or perhaps a Jaguar or a Lexus.

"We are up against the best in the automotive industry, bringing a premium brand to the home of premium brands," Brian Carolin, head of sales and marketing in Europe for Nissan and Infiniti, tells the BBC News website, acknowledging that the German market will be particularly hard to penetrate.

Brand building

Infiniti's initial 25,000 annual sales target may appear low.

Carlos Ghosn, head of Renault and Nissan
What is important is to maintain a roughly balanced plan between opportunities and risks
Carlos Ghosn, chief executive of Nissan and Renault

"I think we are mature enough now, strong enough in some markets to be able to launch [in Europe], and to have the patience and wisdom to not push too much for volume," says Carlos Ghosn, chief executive of Nissan and its alliance partner Renault.

"If volume growth is compatible with high profit margins then it's okay, but otherwise I'm happy to remain a niche."

But when compared with the performance of Japanese rival Lexus, which is barely selling double that number in Europe after 17 years in the market, Infiniti's sales target could even come across as aggressive.

"We benchmarked the experience of other brands," explains Mr Carolin, insisting it is all about having a full range of models with the right diesel engines for Europe.

"Our focus is not to push the volume, but rather to establish the brand."

Broad offering

As such, Infiniti will also serve as a flagship for Mr Ghosn's sprawling automotive empire, which last week saw the Lada-owner Avtovaz join the Renault-Nissan alliance, making it the world's third largest group after Toyota and General Motors.

Renault's Logan
Renault is producing the Logan in emerging markets like India

The alliance's span is wide, not simply in terms of geographical spread.

Its model range is also broad, well beyond a string of new models from both Renault and Nissan.

In addition to Infiniti at the luxury end, there is also Renault's Logan budget car, which is spearheading a push into emerging markets where much of the sales growth is expected to come in the future.

Making money

Infiniti, which saw global sales rise 12% last year, could also help bolster Nissan's profits, which is expected to have risen 4.3% in the year to 31 March 2008, to some 480bn yen ($4.5bn; 2.3bn).

This is partly because profit margins tend to be greater for premium brands.

Mr Ghosn reckons 20% margins should be achievable.

But it is also because much of the cost of its European market entry is carried by its independently-owned dedicated dealership network, initially made up of 25 dealers, rising to some 80 dealers over time.

Moreover, the main development cost of Infiniti's four-model European line-up has already been absorbed by the US market, where it sells some 130-140,000 cars per year.

There may be is some additional expense, however, in adding V6 diesel engines in Europe by 2010.

"What is important is to maintain a roughly balanced plan between opportunities and risks," says Mr Ghosn.

It seems the Infiniti launch in Geneva should provide more upside potential than downside risk.

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