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I've heard the stories about how Nissan got the Fairlady name from the play "My Fair Lady," but I've never been able to find a straight answer as to why they chose to add the Z to the Fairlady/240.

I heard that the "Z", was the car's product file designation within Nissan's Design Department. But I don't know how true that is. Does anyone with a better grasp of Nissan/Datsun history know why they went with "Z" as their sports car designation?
 

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It came from the Japan Navy’s “z” flag and it symbolized that Nissan’s success in the US market rested on the success of the 240.
This is what I' heard about the Z name as well.

From Wikipedia: "During Project Z, the development of the Nissan Z-car which broke open the American market for Japanese automobile exports, project leader Yutaka Katayama used the Z flag as an inspirational symbol."
 
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