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Remodeling Drives Nissan Sales

Zacks Equity Research

The product revamping strategy of Nissan Motor Co. Ltd. (NSANY) is yielding strong results, making 2013 the best year so far for the automaker. Strong demand for Altima, Sentra, Pathfinder, Versa and Rogue led to sales of 733,000 cars in the U.S. from January to July 2013. The sales in August have been impressive as well.

The outstanding results were driven by the ongoing redesigning of Nissan’s top-selling models, beginning with the launch of the redesigned Altima in 2012. Moreover, the company is revamping Sentra, Pathfinder, Versa Note and Rogue in 15 months. These cars cumulatively form almost 75% of the total volume in Nissan’s showrooms.

Per Nissan’s 'Power 88' business plan, this redesigning initiative will support Nissan’s mid-term growth target in the U.S. Though the revamped version of the cars will be available by the end of this year, Nissan is already reaping the benefits.

This year, the company has witnessed 8.5% growth in sales over 2012, driven by record-breaking U.S. monthly sales in 4 out of 7 months. The biggest contribution came from a 230% year-over-year increase in the sales of Nissan LEAF and a 207% year-over-year surge in the sales of the redesigned Pathfinder SUV, which has set new sale records in six consecutive months. Even Nissan Rogue has achieved new records in 4 straight months, while the Sentra, Altima and Versa are witnessing significant growth.

Apart from the U.S., Nissan is also doing well in other parts of America.  The company witnessed 7.5% sales growth in Mexico in the first seven months of 2013. Moreover, it plans to open new manufacturing facilities in Aguascalientes, Mexico and Resende, Brazil.

Nissan currently carries a Zacks Rank #1 (Strong Buy). Other companies in the foreign automobile sector that are worth considering are Volkswagen AG (VLKAY), Peugeot S.A. (PEUGY) and Fuji Heavy Industries Ltd. (FUJHY). Fuji and Volkswagen carry a Zacks Rank #1 (Strong Buy), while Peugeot carries a Zacks Rank #2 (Buy).

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