Nissan Price Cuts Have Auto Industry Worried

Nissan Price Cuts Have Auto Industry Worried

Nissan is the first Japanese automaker to take advantage of the weakening yen, with prices being cut on seven models while boosting incentives.

The aggressive pricing moves by Nissan have the auto industry worrying that a price war is looming, essentially cutting into the profit progress the industry has made since the recession caused sales to plummet. Nissan’s price cuts have helped its U.S. sales increase by 25 percent last month, which is triple the industry average. Its market share also saw the largest increase from any automaker, rising a full point to 7.9 percent.

The biggest concern is whether the big three American automakers in Detroit will follow in Nissan’s footsteps, though they’re maintaining a new-found discipline on discounting. Rebates and price cuts attributed to some of those automaker’s downfalls with General Motors and Chrysler needing government bail out money to stay afloat while Ford needed a self-financed reorganization.

All eyes right now are on Toyota however, to see if the Japanese automaker will compete with Nissan in a price war. Traditionally, Ford and GM view Toyota as the price-setter on the market, while Nissan has a history of erratic price changes.

Nissan’s cuts lowered the average price consumers paid for its models by $500 last month with the biggest decline coming on the Rogue which saw a 12-percent drop in average transaction price.

[Source: Bloomberg]

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