Monday 26 January 2015

How many Titans will Nissan sell?

Is the new Nisan Titan XD going to set the world alight? More to the point, is it going to shake up the North American light-duty pick-up truck market? And if it does, where are those sales going to come from?

So. How many Titan XD pick-up trucks will Nissan sell in North America in 2015? More important, how many in 2016? That’s the $64,000 question.

Fred Diaz, senior vice president of sales and marketing operations at Nissan North America Inc. ought to have a good idea. However, he has only been in the job one year.

Before joining Nissan, Diaz headed up Chrysler Mexico. Diaz has been for many years a Chrysler man having joined Chrysler in 1989; but significantly he became head of Ram Trucking LLC from 2009 to 2013 where he oversaw the launch of the 2013 Ram 1500 before joining Nissan on 1 January 2014.

On the face of it, if anyone can help give the Titan XD a new place in North American light-duty truck market, then Fred Diaz ought to be able do it.

But Diaz’s numbers are important; for there is much that is riding on them. In the case of the Nissan Titan XD, which has just been launched in the US, the question has double importance; double implications.

The XD, which Nissan calls the flagship of the line, will be the only model with the 5-litre Cummins turbodiesel V8. Both V6 and V8 gasoline models will be offered also on the Titan XD and the standard, non-XD model.

But hang on. This is a new engine and a new truck arriving at the same time. So the Titan XD is vitally important for Cummins and Nissan.

In the UK, JaguarLandRover is doing the same thing in launching the Jaguar XE, a brand new aluminium-intensive car with a brand new engine.

And, back in the US, Nissan is not alone. Ford Motor Company last year unveiled a brand-new-from-the-floor-up F-150 pick-up truck with a brand new 2.7litre EcoBoost gasoline V6 engine.

But hey. The F-150 has street cred; it is the biggest selling pick-up truck in North America. And has been for more years than anyone cares to remember.

The track record is already laid. What comes new is Ford’s commitment to the extensive use of aluminium in the F-150 and the choice of a brand new gasoline engine to front up the product.

And this is where there is a subtle difference between the Titan XD and the F-150. For, whereas the Titan XD has all the appearance of being brash, the F-150 is more sophisticated. The F-150 is a melding of an aluminium-intensive structure with an up-market gasoline engine bristling with new technology.

But will the North American pick-up truck buying public notice – appreciate the difference? Do they care as long as the vehicle performs to their requirement? Are they so discerning as to detect the difference between the two engines?

If the Titan XD is going anywhere in terms of penetration, it has to steal sales from the F-150 which, as market leader, potentially has most to lose.

So, while Nissan punts its money on an outsourced V8 diesel, Ford is backing its own in-house gasoline engine. In both cases, however, both pick-ups have untested-by-the-market engines. Both engines have zero in-service record.

The Cummins 5-litre Holset M2 turbocharged V8 diesel pumps out 310bhp and 550lbft torque whereas the Ford 2.7-litre EcoBoost gasoline delivers 325bhp and 375lbft torque. So, if torque matters, the Cummins jobs has it; if you want refinement the Ecoboost has it.  

Interestingly, from an engineering viewpoint, both engines have compacted graphite iron (CGI) vee cylinder blocks. That may not mean much to the drivers of both pick-ups, but worldwide CGI is being recognised for its high-strength and NVH characteristics.

And, what Ford does not know about gasoline and diesel engine technology from a design and cost-benefit manufacturing view point, can be written on the head of a pin. So the money has to be on the EcoBoost and Ford retaining its title.

On the other hand, Cummins and Nissan are no slouches either. But predicting just how many ISX5-litre diesels Cummins will need to build is a big problem. Diaz is not the only one scratching his head.

The Cummins engine has been a long time coming. Engineers at the Columbus, Indiana, company have been developing the product for years. It has been in the doldrums as managers seek out customers that the US Department of Energy has helped to fund. Nissan is the first customer – allowing Cummins executives a brief sign of relief.

But no one quite knows the score; how will the diesel power unit be received.


Forecasting vehicle sales is one of the huge challenges of the automotive world. Much rests on the ability and skill of those who role in life is to forecast just how many models of a brand will move across the forecourt. Senior executives of Nissan Motor Corporation have thrown down the gauntlet to their sales staff when recently the company envisioned the redesigned 2016 Titan could capture 5 per cent of the US full-size pickup market.

“I would say ‘more than 5 per cent,’” clarified José Muñoz, chairman of Nissan North America Inc. “Five percent is the basis for our investment. Less than that would be considered by us as not very successful. Anything more than that would be good. Indeed, I would say this is a modest aspiration.”

Muñoz was giving a keynote address at this month’s JD Power Automotive Summit in San Francisco. He’s the boss, so he should know.

Nissan sold fewer than 13,000 Titans in 2014, although the US pickup truck market expanded as the economy grew and latterly on the backing of falling oil prices. A 5 per cent share of the 2014 full-size pickup market would translate to about 120,000 sales.

Muñoz told his audience that Nissan is looking for roughly 100,000 Titan sales. So Fred Diaz and his team have their work cut out.

In the first two years of US sales for the outgoing Titan, 2004 and 2005, Nissan sold approximately 85,000 Titans. Its sales have dwindled since then for a variety of reasons, not least of which was the simple lack of a fresh-faced replacement model until now.

Nissan has redesigned the truck for 2016 Titan XD to appeal to a wider spectrum of buyers starting late this year, Muñoz has claimed. While the first-generation Titan relied on only one engine offering, the new version will offer more engine and cab configurations, including the turbocharged V8 Cummins diesel engine.

“We sold about 100,000 with only 55 per cent of segment coverage, with less engines,” Muñoz reasoned, referring the Titan’s 2004-05 success. “Now we’re going to cover 90 per cent of the market. We’re very bullish.”

Muñoz claimed the truck production line in Canton, Mississippi, has been tooled to be flexible enough to boost output should sales climb beyond a share of 5 per cent.

Last May, Nissan announced 500 more jobs at the plant (above) which now employs 6,000 and has eight product lines. In the last three years, the company has added 2,000 jobs; an engine for growth as the company has been in Sunderland, in the UK. Canton also has a supplier park.

“We know that the full-sized pickup truck segment in America is a very competitive one,” Muñoz said.

“We know we’re not the best in that segment,” he conceded. “I’m challenging myself. I always think we can do more.”

Nissan’s president and chief executive officer, Carlos Ghosn and therefore Muñoz’s boss, speaking earlier this month at the Detroit Auto Show, also laid down the ground rules (and expectations) as he took centre stage to introduce the 2016 Titan XD.

Ghosn spoke of the truck's new features, the impressive Cummins V8 diesel engine and the extensive amount of time and money required to put together a modern, competitive pickup truck.

"We have done all of this because we see opportunity – an opportunity in the unmet needs of today's American truck customers," Ghosn told journalists.

Unmet needs? What are they? What hole has Nissan spotted not glaringly obvious to the top brass in Ford’s Dearborn headquarters?

It is time for Fred Diaz to make his point. He, as might be expected, reiterates Ghosn’s comments.

Speaking recently to, he said: “It's a huge announcement for the Nissan brand and for the Titan truck. As we moved toward the development of the next-generation Titan, we knew that we needed to have an engine that delivered on what customers and truckers really wanted. We conducted a lot of focus groups with owners of the domestic OE trucks, as well as the foreign OE trucks, and asked the customers 'What is it that you need, what is it that you want?' In the truck business, if you're not attentive to what your customers want, you're destined to fail. What we found was that a lot of customers wanted a V8 diesel in a 1500-class, light-duty truck. We think we're in a unique white-space situation with this truck.”

White-space situation. So that’s the hole. And unique too! Ford execs might be asking: ‘What is a white space situation?’

But hey, at Fiat Chrysler, engineers put an Italian-built VM Motori 3-litre V6 diesel – another CGI vee diesel – in the Ram 1500. What’s going on: a V6 diesel for Ram 1500, a V8 diesel for Titan XD and V6 gasoline engine for F-150? What a strange message to the light-duty truck buying public. Only the CGI vee block specification is common throughout.

Nissan must confess it has been slow to put its house in order. Titan has languished; it has not had a redesign since 2003; that’s 12 years. So to some extent Nissan has neglected a key product.

The 2016 Titan XD, a ground-up redesign of Nissan's full-size pickup, will offer more power, capability, utility and variety to truck customers than its predecessor when it goes on sale late this year.

When production ramps up, Titan will be sold with several cabs, bed sizes and levels of trim. New features include trailer sway control, an integrated trailer brake controller, more storage options in the cabin and laminated front and rear side glass to reduce outside noise. All of these features, topped with the Cummins icing on the top, have served to give Nissan fresh confidence that it can win the day.
                                                Poised for growth?

Some observers reckon the North American the pickup-truck sector is poised for growth in 2015.

The Titan will come in two variants, a traditional full-size competitor and the Titan XD. The XD will lead the market launch, and it arrives late this year.

Diaz claims the idea is to offer something in the general size and price range of a full-size truck, but also have some of the capability of a heavy-duty truck. The XD uses a fully boxed ladder frame, the chassis design from Nissan's commercial division, and the wheelbase is about 20in longer than other Titan models.

"We can compete," said Diaz. "It's been 12 years since we've updated this truck. It's a huge segment.”

Will Nissan be able to outpace Ford, General Motors’ Chevrolet and Fiat Chrysler’s Ram? Will the ‘white-space’ bring the much-needed added vilumes to the canton plant?

“We are very reasonable about our expectations,” notes Diaz. "But we can compete much a better than we are right now. Are we going to do well with this truck? In my opinion, my modest opinion, I think we will."

Certainly, new products will fuel the resurgence of this overlooked segment. GM’s Chevrolet Colorado and GMC Canyon will be on sale for the full year, and the 2016 Toyota Tacoma launches this autumn.

The timing looks good. Gasoline prices are lower – for the time being until Saudi Arabia change its song sheet – and consumers appear to have shown a willingness to consider midsize trucks as an alternative to crossovers or full-size trucks.

While midsize trucks have been overlooked in recent years, they have not disappeared. Tacoma sales slipped 2.8 per cent to 155,041 units in 2014, but it still outsold the full-size Tundra by 36,548 units. Meanwhile, Nissan Frontier sales leapt 18.3 per cent to 74,323 or nearly six times the number of Titans sold last year.

So we are back to the question we faced at the beginning. How many Titan XDs will be sold in a full year? This year, 2015, cannot be counted as a full year as all new models are not on stream. Which brings us to 2016.

Muñoz says 100,000. But how many of those will be diesel? 25,000, 50,000? That last number might be good for 2015, but more will be required for 2016.

But hey, there’s another figure. In his annual round-up after touring the Detroit Auto Show, the ever-perceptive Steve Dawson, who heads up the Stockholm-based SinterCast process control technology company that supplies foundries to make pitch-perfect CI metal, said after the show:Nissan launched the 2016 Titan XD pick-up with a 5-litre V8 diesel engine designed and built by Cummins, with a SinterCast CGI cylinder block. The Titan XD is a light duty pick-up with engine performance that is uniquely positioned between the light duty and the super duty sectors. The V8 diesel produces 32 per cent more torque than the nearest rival in the light duty sector, providing the towing and payload capability of a super duty truck. Nissan estimates that approximately 150,000 pick-up buyers will be attracted by the unique positioning. Sales are expected to begin during the third quarter of 2015.”

So, take your choice. In a full year, 2016, Nissan could top 100,000 of which half might be Cummins diesels. Looking on the good side, this could stretch to 75,000. So really, Cummins needs at least two more substantial customers to lift the ISX5 volume to a figure that begins to make sense to repay the investment in the engine.

Meanwhile at Ford, the automaker can make up its own mind as to how far it wants (needs) to spread the 2.7-litre net. Lincoln is already there and others are coming. Ford top brass should be able to load the Lima, Ohio engine plant comfortably.

So, sorry, there is no answer here to the question posed at the beginning. But by the end of this year we should have part of it.

No comments: