Infiniti Goes Global: Targets Small Volumes, Big Profits

March 5, 2008

It's not often you get the opportunity to roll out a new car -- and a new car company -- all in the same day. But that was the honor, and the challenge, handed to Jim Wright, this week, as he and his team unveiled both the 2009 Infiniti FX50 crossover vehicle and the new distribution network that will launch the Japanese luxury marque in the critical and highly competitive European market.

The dual debut is the most significant step yet in Nissan CEO Carlos Ghosn's plan to take Infiniti global. Until now, the nameplate had focused on the U.S. market, where it debuted two decades ago, and a few, key emerging markets, such as Russia, where it debuted in 2006, and has struck an unexpectedly strong chord with that country’s new affluent class.

Russia was a logical trial run, Ghosn explained, during an interview at the 2008 Geneva Motor Show, “because there you have a level playing field,” with virtually every upscale automaker struggling to capture the new market. By comparison, Europe poses a daunting challenge. It’s not just a well-established market, but one that serves as home to some of the toughest luxury-class competitors in the world.

But in typical fashion, once Ghosn makes a decision, he seldom hesitates, laying out some ambitious targets for Wright, the new boss of Infiniti Europe, and his team.

At first glance, Ghosn’s goals might not seem that ambitious: he expects Infiniti Europe to be selling 25,000 cars, trucks and crossovers annually by 2013. But the Brazilian-born CEO doesn’t equate big with better, at least in terms of luxury sales.

“I am not about making Infiniti a big volume brand,” he explained, during a wide-ranging conversation. “I don’t want to lose this edge of ‘truly luxurious,’ ‘truly unique.’ I am ready to accept that this will be a small luxury brand.”

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So, went the next question: what does define success? “I am extra demanding on profits.” That led to an involuntary flinch from Wright, sitting quietly to Ghosn’s right. “If you do your job right,” Ghosn continued, Wright clearly paying attention, “you should be around 20 percent (margins in the luxury) market today.”

Such numbers might come as a surprise to those who’ve watched Infiniti, over the years. Launched in the U.S. at the same time as its Japanese rival, Toyota’s Lexus division, Infiniti seemed to struggle from the start to gain traction. Even today, its volumes – about 150,000 last year -- lag well behind those of Lexus, and even more so the German luxury giants, Mercedes-Benz and BMW.

But Ghosn suggested that appearances can be misleading, and even before its global ramp-up, Infiniti is providing “double-digit” profit margins.

Infiniti’s European launch is well-timed, coming just as the Nissan subsidiary rolls out a closely-watched new product, the FX50. And most of the rest of the brand’s line-up is new, or relatively so. But getting car-saturated Europe to recognize that will take some real work – and time – which is why Ghosn is hedging his bets and holding onto relatively low sales aspirations.

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