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Auto Industry Should Stop Discounting

Poor design and discounted pricing is diminishing the value of cars and trucks, says Nissan Motor CEO

The auto industry has diminished the value of vehicles by constant discounting and bland design, commented Nissan Motor Co. chief executive, Carlos Ghosn, at the opening of media preview days at the New York Auto Show.

Ghosn said incentive spending has been going down in recent months, but automakers still spent $3,500 per vehicle on incentives in 2005. That was money that wasn't being invested in good design or new vehicles, he remarked.

''You'd be hard-pressed to name another industry in which so much emphasis is placed on discounting to move products,'' said Ghosn.

Ghosn said some manufacturers are churning out too many vehicles that are too similar just to keep their factories operational, and ''the customer gets the message that those products are not worth the prices printed on their stickers.''

''Manufacturers must reawaken passion for cars and trucks and restore the value to the minds of our customers,'' Ghosn said.

Ghosn said Nissan increased its U.S. market share by offering well-designed vehicles that got an emotional response from buyers, like the Nissan Murano crossover and Infiniti G35 sedan. Nissan planned to unveil the 2007 G35 during the New York Auto Show.

According to Edmunds.com, an online vehicle information service, Nissan spent an average of $2,314 per vehicle in March. That was less than the average of $3,205 per vehicle at U.S. manufacturers, but almost $1,000 more than Toyota Motor Corp.

Nissan's U.S. market share rose to 6.3% last year from 4% in 1999. At the same time, General Motors Corp. and Ford Motor Co. saw their market share fall. Both U.S. automakers are now cutting jobs and closing plants to try to limit overproduction.

Ghosn wouldn't comment on GM and Ford's restructuring efforts.

''I don't think the solution comes from the outside,'' he said, adding that he rarely took others' advice when he was restructuring Nissan in the late 1990s.

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