Danger Caution Ahead

Nissan CEO Carlos Ghosn admits he's nervous. His company just launched its most important car in years, the redesigned 2007 Altima sedan. The model it's replacing was one of the best-selling cars in 2005, a monster hit for Nissan, and Ghosn has no idea if the latest edition will fare as well. "We have so many new products," he told TIME in an interview in New York City, "that it's a very tense period for us."

Indeed, after an extended drought, Nissan is roaring back with what Ghosn calls a "product offensive." New models include the redesigned Sentra sedan, the subcompact Versa hatchback and, coming next year, a crossover called Rogue. At the Los Angeles Auto Show on Nov. 29, Nissan plans to unveil a coupe version of the Altima, due to go on sale next summer. "When you put so much energy and investment in, you're always nervous," says Ghosn. "Until you see the first few months of sales, you have doubts."

He's not the only one with doubts. Investors and industry watchers are wondering whether Nissan can rev up its sagging sales with the new models. The company has hit some speed bumps lately, after a long run of posting record sales and profits, largely engineered by Ghosn's multicontinental managing act (which has included running Renault since last year). In the first six months of Nissan's 2006 fiscal year, operating profits fell 15.3%, to $3 billion. Vehicle sales fell 6.9% worldwide, and revenues have been flat, at about $39 billion.

In the U.S., where Nissan earns the bulk of its profits, full-size vehicles like the Armada SUV and Titan pickup need generous incentives to sell, even as gas prices have come down. Armada and Titan drove Nissan into new segments but not without picking up some dents. Both models have scored dismally in consumer surveys of vehicle reliability, tarnishing Nissan's image as a high-quality Japanese brand.

None of this has gone un-detected by investors. While Nissan boasts a market capitalization of about $53 billion--more than triple that of General Motors--the stock has fallen well behind shares of Japanese rivals Toyota and Honda in the past two years. And some of the air has come out of the chief's reputation. "Ghosn's strategy has been all about cost cutting," says Koji Endo, an analyst with Credit Suisse in Tokyo. "He needs to prove that he can bring real growth to the company's top line. We've yet to see that."

If Ghosn is running a little rough these days, it would be understandable. Seven years ago, Nissan was practically scrap metal: it had a fleet of dull cars, a tangled mess of suppliers, unproductive plants and $20 billion in debt. Ghosn was given the job of salvage man after his bosses at Renault bought a controlling stake. Born in Brazil and reared in Lebanon, Ghosn found his way to tire giant Michelin, where he developed his restructuring chops. But he had never run a car company, let alone a Japanese one, and almost everyone bet against him: a foreigner with a funny name tackling Japan Inc. He proved them spectacularly wrong, turning Nissan into an auto power with industry-leading profits and such stylish vehicles as the 350Z sports car, Murano SUV and Altima. Ghosn's success made him a mythic figure in Japan. In France they crowned him Le Cost Killer. And in 2005 he added a couple more job titlespresident and CEO of Renault.