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Nissan’s turn from the eccentric to the mainstream

2015 Nissan JUKE2015 Nissan JUKE
2015 Nissan JukeCourtesy of Nissan

Critics have been stretching to find just the right words to describe the Juke, a small crossover made by Nissan. When the updated 2015 model was shown at the Los Angeles Auto Show in November, Autoblog said it “reeks of bad ideas. Another web outlet, Digital Trends, referred to it as “Nissan’s ugly duckling” and declared the new edition was “even wackier than before.” Summed up USA Today: “[It] lacks the true versatility of an SUV. And its high-riding stance robs it of the nimbleness of a lower-slung sports sedan or hatchback would deliver.

From its frogs-eye turn signals to its over-styled wheel arches and radically-sloping rear roof, the Juke makes even the old Pontiac Aztek look conventional by comparison. Yet despite its polarizing design, Nissan has managed to sell 34,021 Jukes for the first 10 months of 2014.

Just about everything with a Nissan badge has been selling in 2014. The automaker has transformed what previously had been an eccentric assortment of models into a more mainstream lineup that has broader appeal. There is no secret sauce: Nissan is systematically upgrading its product line with more elegant designs that share a strong family resemblance and more comfortable interiors that are closer to business class than coach. In the process, it has managed to make itself the second best performing automaker in the U.S. this year after Chrysler. When results from Infiniti, its premium brand, added in, Nissan sales have climbed at double the industry average this year, up 13%.

This late-blooming success comes as something of a vindication for the management of CEO Carlos Ghosn. Ghosn (rhymes with phone) who took over Nissan in 1999 and is the industry’s longest chief executive, sets tough numerical targets for his managers. He is unsparing when they aren’t met and turnover at the top of the company is high. “Once the commitment is set, no matter what happens, you have to go for it,” Tatsuo Yoshida, a former Nissan employee who is now an analyst at Barclays told the Wall Street Journal in September. “If you give up, you are out.”

That kind of pressure to perform, combined with a product line that could be charitably described as uneven, has often forced Nissan to use extreme measures to meet its sales targets. Over the years, became known as the king of discounts because its incentives were so generous. But there are fewer discounts this year. Nissan has been able to grow market share while curbing incentive spending,” says Edmunds.com analyst Jeremy Acevedo. “Obviously this is great for the company’s bottom line and is an encouraging indicator of sustainable growth.”

Credit for the improved performance goes to one of Ghosn’s more recent hires, Fred Diaz, who joined Nissan in April 2013 from Chrysler, where he was in charge of Ram Truck. As head of sales, marketing, and operations, Diaz pushed a strategy of cutting prices to boost turnover while reducing incentives to build margins.

The strategy was risky, but it paid off. Demand is so great that Nissan is running all its North American plants on three shifts and has even begun importing cars from Japan to meet shortages. Currency fluctuations have provided a nice bonus. “The yen has been a handicap for us for the past three years, but it’s no longer a handicap,” Ghosn told Automotive News in an interview published in November. “We haven’t changed our strategy [about building cars in North America]. But now, with the yen at 114 or 115 to the dollar, shipping some cars from Japan to support our offensive here makes sense.”

Diaz has also been pruning slow-selling niche models like Cube and the Murano CrossCabriolet from Nissan’s lineup and focused on four high-volume core vehicles that draw customers into sales rooms. Ranked in size, they are:

Altima: The Altima has managed to make sales gains (3.4%) in the fiercely competitive midsize segment. Nissan’s style leader and lightest car in its class, it ranks as the fourth most popular passenger car in America, just behind the Toyota Corolla.

Rogue: A surprise hit, this midsize crossover was redesigned this year to add an optional third row of seats and its sales are up 23%. Like Altima, it is built at Nissan’s manufacturing complex in Smyrna, Tenn.

Sentra: Nissan upscaled the Sentra to make the one-time compact larger and more like the Altima. One critic described it as “cheap and roomy,” but customers love it and sales have risen 44%.

Versa: A makeover made the Versa look more like the Sentra, with big new headlights and a chrome-surrounded grille. With sales up 21%, the Versa is America’s best-selling subcompact.

That kind of momentum should hold Nissan in good stead over the next couple of months as it launches a couple of important new models. Just arriving in dealers is the reengineered Murano, a mid-size crossover with eye-catching concept-car styling , and a sportier Maxima sedan coming to reclaim its standing as the flagship of the Nissan line. New models almost always boost sales, and this time shouldn’t be any different. “Look for Nissan to continue to gain market share going forward as it releases updates to the Murano, Maxima, and Titan,” says Edmunds.com’s Acevedo.

Ah, the Titan. Nissan is bringing out an all-new version of pickup, reengineered for the first time since its original introduction in 2003. Ghosn had high hopes for the Titan, but he couldn’t convince loyal truck buyers to switch out of more familiar brands, and sales shrank as the truck aged, approaching 100,00 early in its run but falling off sharply after that. Only 10,686 have been sold this year—a pittance when you consider that industry leader Ford (F) has moved 620,447 F-series trucks in the same period. Not surprisingly, Ghosn sees the volume from a successful Titan as crucial to meeting his target of 10% U.S. market share, up from 8.5% today.

The wraps come off the new Titan at the Detroit Auto Show in January. Ghosn will undoubtedly be pressing Diaz to put his Ram experience at Chrysler to good use to make it a success. But all he really needs to do is to absorb the lessons from Nissan’s wonderful year: Give customers elegant designs and nicer features than they expect—and they will come.