Nissan Shouldn’t Kill the S16 – A Review of Market Demographics and Competitive Standing
Nissan recently announced the official decision NOT to build the successor to the S15, which would have brought back the tradition of a sporty, affordable platform that could directly compete with the Toyota FR-S, Subaru BRZ, 5th-gen Supra, and Hyundai Genesis Coupe.
As we reported previously, the “Mini-Z” project (internally designated the “New Small Sports”) had already been mostly developed, but was shelved approximately a year ago. At the time, we were told it had simply been placed on hold in order to focus on preparation for a multi-car blitz of revisions (including the new Sentra, Altima, Pathfinder, and Rogue).
The planned concept would have slotted in just beneath the base 370Z, but priced similarly to the Subaru BRZ.
However, we’re now learning that plans for a rear-drive coupe with a high performance 4-cylinder engine never really had a chance with upper management. This clearly won’t sit well with the legions of Nissan loyalists who have been clamoring for a 6MT FR platform since 1998.
Automakers scrap ideas all the time, but it’s the company’s justification of this abandonment that leaves us scratching our heads.
According to Nissan Executive Vice President Andy Palmer, the Nissan Juke covers that demographic just fine. As we’ve long suspected, volume, not brand loyalty or enthusiasm, is the driving force behind this decision. At 78,000 Nissan Jukes sold in the US since its introduction, apparently that’s enough sales to risk disappointing the Nissan faithful.
Says Mr. Palmer, “Gen Y and Gen Z is less interested in that kind of execution of a sports car. For a younger generation, [the Juke] is a much more profound way of going to market.” Palmer added that the Nismo variant of the Juke would fill that void perfectly: “The decision to go to Juke Nismo, lending that kind of performance to that kind of car is consciously our decision to get at those enthusiastic young, sports-oriented type of customers – We think the [Juke and Juke Nismo] is a much more relevant execution for them.”
Mr. Palmer was asked if the successful sales of the Toyobaru twins were proof that Nissan should have continued with Project S16. In response, Mr. Palmer asked which customers were buying the FR-S and BRZ. He went on to explain that these customers are in their late 20s and early 30s (the S16’s target demographic)… Generation Y and the cusp of Generation Z… “They’re not as interested in cars like the FR-S as previous generations were – That generation has a different attitude towards sporty performance and a different attitude to life than you or I do.”
Unfortunately for those of us who thought Nissan was finally starting to get “in touch” with its consumer base across the model lineup, they’ve shown they’re plenty happy with the status quo.
First of all, I’m not about to assert that I’m any more skilled at projecting new car sales than the executive VP of Japan’s second-largest car company. However, after supporting the brand for over a decade, through thick and thin, I think I’m qualified to speak as an enthusiast. Further, after owning 22 Nissan-built vehicles, spanning from 1960 to 2009, I’m fairly familiar with the past and present lineups (and their resultant successes and failures). Nissan used to make the best RWD coupes in the world. So, for an Executive VP to claim that younger buyers have little interest in a manual trans, front-engine, rear-drive, affordable car is similar to someone saying in 1996, “What is this ‘drifting’ nonsense? It’ll never last.” Nothing could be further from the truth.
Let’s dissect Mr. Palmer’s position on the matter. It’s well known in the web world that trying to pin down the likes and dislikes of a fickle, diverse, and “scattered” demographic such as Gen-Y and Gen-Z is like trying to herd cats. However, I’m a Gen-Xer who spends 90% of his waking hours with, and around, Gen Y (roughly, those born between 1984 and 2000) and Gen Z (generally those born between 1995 and 2010).
The BRZ and FR-S Are Not Targeted Towards Gen Y and Z:
Mr. Palmer asserts that Gen Y and Z are buying the FR-S and BRZ. It’s simply not true. Generation Y, right now, is between 12 and 28 years of age. Assuming everyone in Generation Y starts driving at 17, only two-thirds of Generation Y is old enough to have a license, and I’d bet a paycheck that there’s not a lot of twenty-somethings buying brand new cars. So, Generation Y is off the table as a potential “target demographic”. Generation Z? Don’t be silly. They’re between 2 and 17 years of age. In fact, any rational discussion of car buying trends shouldn’t even consider Gen Z unless you’re planning ahead for the 2030 model year. So we can scratch that off the list – We’re clearly not talking about Generation Y and Z – they’re simply not old enough. If your Product Planners are targeting Generation Y and Z, they have no business working in the automotive industry…yet.
Next, Mr. Palmer states the Juke was “consciously [chosen] to get at those enthusiastic, sports-oriented customers.” While that may be true, it’s not working. There’s no waiting list to purchase a Juke, and sales in 2012 have been anemic in the U.S. There’s a bigger problem with this line of thinking: the Honda Element was supposed to target this market, too. Guess what? The median age of Element buyers is 52. That means people who were, during the Element’s production span, born between 1950 and 1959. Wow.
Well, that’s because the Element was boring. Ok, I’ll give you that. How about the Kia Soul? The average age of a Kia Soul owner is 50. Apparently, rapping hamsters in saggy pants didn’t help reach the youth market. How about the hip-to-be-square Scion xB? A bunch of 42 year olds bought it. And if that wasn’t enough to convince the bean-counters at Nissan, let’s look at our very own Nissan Cube (I own one). The average age of a Cube buyer is a comparatively grizzled 46 years old. Instead of a sound system, it should have handrails, waterproof seats and a Geritol dispenser.
Getting back to the Juke… Despite its fun image, as of this writing, the average age of a Nissan Juke buyer is 40 – popular among young childless couples and older empty nesters. I think we can all agree that “targeting” a certain demographic is a hit-or-miss proposition, even for people who are well-paid to KNOW such things.
Mr. Palmer contends that FR-S and BRZ buyers are “in their late 20’s or early 30’s.” This is inaccurate. The numbers aren’t out yet for the FR-S and the BRZ. But when they start filtering in, let’s not act surprised when we see that they’re being primarily bought by the 30-45 age bracket. After the lessons of the Element, Soul, xB, Cube, and yes, even the Juke, this should be a no-brainer for every market analyst, product strategist and accountant in Nissan North America.
At best, the FR-S and BRZ are being bought by the tail-end of Generation X. According to a very informal poll of POTENTIAL FR-S and BRZ buyers, conducted on a FR-S / BRZ online forum, 24.3% of them were between 18 and 25. 49.6% were between 25 and 35, and 26.1% were between 35 and 45. Considering forum use in general tapers off around 35 years of age, those numbers are most certainly skewed towards the low end – and yet 76% of respondents were OVER 25. Based on my own knowledge of car buyers, I don’t know anyone under 30 driving a FR-S or BRZ. If they are, they didn’t buy it. Here’s why:
Generation Y and Z aren’t New Car Buyers:
From 2007 to 2010, the average age of a new car buyer rose from 52 to 56. That tells us one thing: New cars aren’t being bought by youngsters. The younger baby boomers are STILL the largest segment of the car-buying public. The rate of U.S. auto sales to 18- to 34-year-old buyers declined to 11 percent in April 2012, down from 17 percent for the same age group in April 2007, before the recession, according to R.L. Polk & Co.
Further, according to the Federal Highway Administration, drivers under 30 years of age comprised only 21% of the total driving population in 2010. Among Americans aged 20-24 in 1983, nearly 92 percent had driver’s licenses. Twenty-five years later, it was 82 percent. Today, it’s estimated that less than 70% of 20-24 year-olds in America even HAVE a driver’s license.
Even for those who have moved out of their parents’ basement, how many twenty-somethings are well-compensated in their field of employment? How many of those are buying brand new cars? For that matter, how many own cars at all? In the midst of the greatest recession since the 1930’s, how many twenty-somethings have $25,000 to $29,000 to spend on a car that they really don’t need? Add the demands of insuring and maintaining a new car, and it’s simply not feasible. Younger workers are being paid less, but the economy is only partly to blame. Many “Millenials” would rather spend their money on technology than a vehicle. The ease of making contact with peers from the comfort of one’s bedroom PC, smartphone, laptop or iPad has lessened the need for automotive travel among Generations X through Z. In this age where technology is king, and college seems to last well into your mid-20’s, there’s really no need for manufacturers to concern themselves with appeasing “customers” in their early 20’s.
In a recent Motor Trend comparison test of six sub-$30K sporty cars, the FR-S and BRZ took the #1 and #2 slots – with authority. They’re the hot ticket. They’ve created enormous buzz, and some markets are reporting 6-12 month wait times for BRZ orders. The aftermarket for these two cars is seeing a mini-Renaissance of sorts, clambering to produce modifications and personalizations for these cars. Once need only subscribe to trade publications or be a member of SEMA to see the mad dash to access this market. If that weren’t enough, the Hyundai Genesis Coupe has exploited this wide-open niche with their 2.0T R-spec. The Korean manufacturers proved that buyers will line up for a 280hp, rear-drive, 6-speed manual with an LSD and Brembo brakes, if it can be bought for around $26k.
Tooling up for production of an S16 resurrection shouldn’t be difficult for a company with Nissan’s vast resources. The brilliant and talented Shiro Nakamura (Nissan’s Chief Creative Officer) could easily assemble a team that would get a viable S16 project to market in record time, and snatch sales from Subaru. Taking the “parts bin” approach that the Big Three have been relying on for decades would lessen construction costs. When it comes to utilizing drivetrains across multiple platforms, Nissan brilliantly authored the book – An MR20DDT would guarantee 250hp and 215lb-ft of torque, while still delivering 35 mpg. Utilizing the 6-speed and driveline from the 370Z would be spectacularly competent. Just the competitive edge of 250hp would be sufficient to tear buyers away from the other Japanese dealerships.
The design need not be overdone – The Toyota and Subaru coupes are not particularly attractive cars, and Nissan’s Design Studios regularly crank out impressive, cutting-edge concepts. The Mini-Z Concept and the Esflow Concept would be a great place to start. As far back as 2006, someone in Nissan’s leadership explored the idea of building something to compete with the Miata, Sky and Solstice. Nissan showed the Urge Concept, a 2400-pound, rear-drive roadster with a small-displacement engine and six-speed manual transmission, at the 2006 Detroit auto show. It didn’t get built, and the Miata remained the default rear-drive small car of choice, selling in record numbers.
Even a lightweight, more aerodynamic, six-speed, rear-drive, turbocharged 4-cylinder variant of the Nissan Z would fill this niche admirably… As long as it can be brought to market in the $25,000 price range.
Nissan has taken chances before: Let’s remember, this is a company that built the CrossCabriolet, a vehicle that has been brutally panned by journalists and the public – and it simply hasn’t sold.
Furthermore, Nissan has always had an image of being “fun to drive for the common person”… from the Datsun Z to the death of the 240sx, Nissan showrooms contained something inexpensive that was truly fun to drive. Somehow, Nissan lost that “image” and has suffered through a major identity crisis over the past decade – CVT transmissions everywhere, a unibody Pathfinder, vanilla-flavored Sentras and Versas, a long-in-the-tooth Titan, and safe, smart, but personality-free Altimas and Maximas. Every auto manufacturer has an identity and that identity should show up in everything they build. I believe Nissan is still capable of building a fun car with personality, and it absolutely MUST do so in order to maintain that image and reinforce the brand stereotypes. Whatever happened to “shift_excitement“? And “Dogs Love Trucks“? It’s not too late to take it back.
This plea isn’t just the lunatic ramblings of a guy with a keyboard and an audience. I’m speaking on behalf of the 250,000 people who have, at some point over the past decade, been enthusiastic enough to register on this forum. I’m speaking for the people I spend time with – the people that come to our events, the people I hang out with, and the 30,000 UNIQUE readers that find this site EACH DAY. We’ve been Nissan enthusiasts for decades. We wrench on them, personalize them, restore them, race them, show them, and pass them down to our kids. Some of us have been engaging in social media related to our Nissans since the mid-90’s.
The Juke is Not the Solution:
Mr. Palmer, I’m asking you to boldly disagree with your bean counters – to listen to your constituents, the people who spend the money to buy the cars that spring from the creative minds of your designers, the projects that you give your blessing to. Contrary to popular belief, the joy of driving is not dead. It may not be a top priority for the under-25 crowd, but it resonates deeply with those of us in the same market that Toyobaru has so precisely targeted – and they’re getting our attention.
Does Nissan really want to explain missing yet ANOTHER opportunity to snatch sales from a couple other Japanese automakers that “figured it out” in 2012?
Here’s your “market research”: Listen to those of us who are between 28 and 45 who WILL buy a new car in the next year or two. We’re enthusiasts. We’re smart people. We know our stuff, and we love our Nissans.
Give Project S16 the green light, Mr. Palmer. We’re counting on you.
Questions, comments, or just want to weigh in with YOUR opinion? Discussion is here: Nissan Needs an Affordable RWD Sports Car
The author, Greg Childs, is CEO of the NICOclub Network and a long-time Nissan enthusiast, restorer and collector.