BUMPY ROAD FOR NISSAN; ONCE-PROUD MAKER FIGHTS FOR SURVIVAL.

Byline: Joji Sakurai Associated Press 

For decades, Nissan Motor Co. was an icon of Japan's entrepreneurial success, a savvy technological innovator standing in counterpoint to the lumbering titans of Detroit.

Now the company is wallowing in debt, struggling with overcapacity and shrinking sales - and wooing overseas partners just to stay afloat.

What went wrong?

Company executives confess they misread or ignored consumer trends in Japan and the United States, allowing rivals to surpass them with numerous innovations since the early 1980s.

Nissan's rigid corporate policies and overemphasis on maintaining market share at the expense of innovation have become the source of soul-searching in boardrooms across Japan.

``The mistakes that Nissan made can really be said of Japanese industry in general,'' said Takuya Nozaki, an analyst at Teikoku Data Bank, a major private Japanese research company.

After grabbing the imagination of the American consumer in the 1970s with its Datsun Z series of sports cars, Nissan has since acquired a different, less flattering image among the public: reliable, but boring.

``From a marketing perspective, we've been out of touch with consumer desires for a long time,'' admitted Nissan spokesman Masataka Saito. ``There were serious problems with the designs and practicality of our vehicles.''

When new vehicle types like the sport-utility vehicle suddenly became popular in Japan, Nissan's domestic rivals were quick to seize the opportunity and roll out attractive models. Nissan tried to play catch-up and never made it.

Concerned more with maintaining market share than staying profitable, Nissan spread itself thin financially by churning out new models to match Toyota's rapidly expanding product range.

``The need to maintain a full model lineup caused Nissan's product balance to crumble,'' said Tateo Takasugi, president of the Japanese auto industry think tank Fourin Inc.

In the United States, Nissan pushed the Maxima to compete with Toyota's big-selling Camry and Honda's Accord, but failed to make an impact because it lacked a strong product identity.

With fewer resources than its larger rivals, Nissan could not afford to pour in the same amount of money and manpower needed to produce competitive vehicles.

Nissan's resources also have been severely strained by its expansion in the North American car-leasing business, where it lost almost $2 billion last year alone.

Nissan, rather than maintaining its market share, has seen it erode. It now holds 20 percent of the Japanese market, down from 30 percent in the early 1980s.

In the United States, the company now has about 4 percent of the market, compared with 5.6 percent in 1982.

The company has posted losses in five of the past six years, and has debts estimated at nearly $30 billion, an amount roughly equal to its annual sales.

And though it is still Japan's No.2 automaker in sales, Nissan already has begun talks with German auto giant DaimlerChrysler on a merger, and it makes no secret of its desire to find an outside savior.

``I believe we'll need to find an overseas partner in order to survive,'' Saito said.

Things have gotten so bad that Nissan has announced it will sell a chunk of its headquarters in the posh Ginza district of Tokyo as part of a far-reaching retrenching drive.

Japan's long economic slump and the Asian economic crisis have hit the country's entire auto industry hard, and Toyota and Honda also have suffered steep losses in recent years. But Nissan's predicament runs deeper than Japan's general economic malaise.

``Nissan's troubles cannot be blamed on the bursting of Japan's economic bubble,'' said Fourin's Takasugi. ``It has had serious organizational problems.''

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Photo: (1--2--Color) Pedestrians pass by the Nissan Gallery auto showroom, above, in the heart of Tokyo's famed Ginza shopping district. Inside, the latest model of Nissan's Silvia coupe, left, draws a crowd for a closer inspection.

Shizuo Kambayashi/Associated Press