Creating a car for the future
The story behind Nissan's new 2008 Rogue highlights the challenges - and pitfalls - of the auto business, says Fortune's Alex Taylor.
NEW YORK (Fortune) -- Way back in 2002 - before the war in Iraq, the collapse of the dollar, or $3-a-gallon gasoline - Nissan started thinking about what kind of cars it would sell in the 2008 model year. One of the results is the Rogue, which will arrive in showrooms this fall. The way Nissan went about conceiving the Rogue reveals the complexities of predicting what customers will want to buy five years into the future - and the risk of betting hundreds of millions of dollars on the outcome.
Getting the answer right is especially important to Nissan right now. Its much-lauded turnaround under CEO Carlos Ghosn has run out of steam and it is in danger of sinking into the second tier of Japanese auto companies, behind Toyota (Charts) and Honda (Charts).
Even scarier, Nissan has guessed wrong in the past. A couple of years ago, it tried to figure out away to attract new buyers to the homely minivan and came up with the concept of the Sexy Mom. Trouble is, the 2004 Quest minivan designed for Sexy Mom substituted fashion for functionality, and flopped in the marketplace. Nissan was forced to de-glamorize the Quest so it could begin to attract more traditional Soccer Moms.
The Quest experience didn't stop Nissan's California-based Global Exploratory Group from trying again five years ago to predict the future. Starting in 2002, the group started with the obligatory clean sheet of paper to figure out how to fill a gap in Nissan's product lineup.
What it came up with was the concept of an entry-level car for members of Generation X, those people born between 1965 and 1978, who were about to get married and start a family.
The first step was figuring out who these buyers were and what they were like. After some research, the group decided that members of Generation X were "the latch key generation." They grew up feeling "unprotected and insecure," and, Nissan concluded, this experience would shape their expectations for their new families and define how they approach parenting.
What did these latch-key kids want in a vehicle? Nissan figured they desired "safety and practicality" but didn't want to advertise their family status. Translation: no minivans allowed.
No traditional SUVs either. These buyers were turned off by heavy body-on-frame designs like the Ford (Charts, Fortune 500) Explorer . They didn't see the need of buying a two-ton vehicle with four-wheel drive for a trip to Whole Foods or Starbucks.
When the generational analysis was completed, the Global Exploratory Group turned its findings over to Nissan's product planning group to develop a concept - sedan, tall wagon or box on wheels - to fit the perceived needs, and to Nissan's designers to create a look.
The group wanted something that would combine style as well as utility. It figured male Gen X'ers would already be driving compact pickups or motorcycles and their wives would be sedan owners. With children on the way or already arrived, these buyers needed something with a tailgate and storage capacity that still exuded individuality.
Nissan's biggest competition was Toyota's RAV-4 and Honda's CRV. But Nissan thought both vehicles were too clunky-looking. So it came up with a design to set its vehicle apart, with an aggressive front end, bulging rear fenders, and prominent 17" wheels. The marketing department picked the name "Rogue" to reflect the rebelliousness of the target buyers.
The automotive media got to see the Rogue for the first time in January at the Detroit auto show. Surrounded by glitzier vehicles, it was overshadowed. Still, Nissan believes that it has targeted the right market - and done it correctly.
When it arrives this fall, the Rogue will be crammed with features designed around the theme of "planned spontaneity." They're aimed at an imaginary guy who drops his kids off at school, and then runs to the shore or the mountains for a joy ride before heading to the office. There's a convenient storage container with a pop-up lid, remote door-unlocking and engine start, and a Bluetooth hands-free phone system.
Prices for the Rogue will start under $20,000. Whether Nissan has another CRV on its hands - or another Quest - will probably be known by Christmas. The members of the Global Exploratory Group aren't holding their breath. They are already looking at what Nissan should be doing in 2012.