Jed Connelly, senior vice president, sales and marketing, Nissan North America, Inc., today delivered the keynote address to an audience of automotive media and industry executives at the California International Auto Show. The speech, titled "Much Ado About Nothing Down," focused on the hidden costs of automotive incentive marketing and the potential negative impact on automakers' ability to develop new products for the upcoming "Millennial" generation of car and truck buyers. "Right now, right here, we stand at a critical departure point," said Connelly. "We can continue to follow the path of escalating incentives that kicked into high gear in late September, or we can start to dial it back and compete on the strength of our products, rather than the size of the discount." Connelly cited several key dangers to the current wave of zero down, 72-month auto loans, including buyers quickly finding themselves in the position of owing more than their vehicle is worth. "Edmunds.com recently estimated that 30% of new vehicle buyers nationwide were upside down on their loans last year, up from 24% in 2002 and it is likely to increase this year," said Connelly. The other major concern Connelly focused on is the potential impact incentives have on reducing the industry's ability to invest in future vehicle research and development. "In today's 17-million vehicle U.S. car market, for every extra $1,000 the manufacturers spend on incentives, we give up $17 billion that could be spent on R&D, the lifeblood of our industry. At a level of $3,000 incentives, that's $51 billion -- enough to potentially develop over 100 new products," he explained. "Incentive marketing programs also take away from the development of new technologies -- including safety and environmental programs, and from building new plants to make new products." Connelly also addressed the challenge of developing new products that will meet the demands of the "Echo Boomers" or "Millennials," the group of 100 million coming-of-age consumers that are just about to enter the car market -- a group that is technically savvy and has grown up in a culture of pure consumerism. "The question of the moment, and the future, is what will turn on these Millennials? A $6,000 incentive or state-of-the-art technology?" asked Connelly. "A $0 down, 0% loan or a vehicle that is safe, environmentally and socially responsible, fun-to-drive and completely connected?" Connelly concluded: "And this, ultimately, is the not-so-hidden cost of the incentive trap: finding ourselves in the position of selling old products to a new generation." Connelly oversees all marketing and sales functions for the Nissan and Infiniti divisions, including the direction of the planning and implementation of all sales and marketing strategies. In addition to his management duties, Connelly is a member of the North American Management Committee, the key decision making body for Nissan in North America, and a member of the U.S. Management Committee.