Nissan dealers size up new stair-step rules
Nissan dealers will find out early this year whether the new ground rules for their factory stair-step sales events are more palatable than in the past.
The company spent much of 2013 working out new procedure for the often controversial industry sales practice, which gives retailers incentive to sell beyond their normal forecasts. Members of the Nissan National Dealer Advisory Board worked with automaker executives to come up with a new approach.
Under the new system, called the Dealer Growth Program, Nissan will inform retailers of its targets further in advance than in the past. Dealers will know what the program sales targets are going to be and be able to plan months, rather than weeks, in advance to prepare for them and to stock the inventory they need to make it happen, says Brad Fenton, dealer board chairman.
"Frankly, dealers hadn't been happy with the process," says Fenton, whose Fenton Motors owns Nissan stores in Oklahoma and Missouri. "It was causing some frustration. We might not get our numbers till the fourth, fifth, sixth of the month, almost after the fact, and they're difficult numbers to hit."
Fenton credits the automaker with taking the initiative to fix the problem.
"Nissan came to us and asked how it could be restructured to suit us. And it was probably harder for us dealers to come together in agreement than it was for Nissan," he says.
"We created a cross-sectional committee of about 50 dealers and Nissan folks to work on this as a group."
Stair-steps have vexed many franchised dealers at many brands who argue that the programs pressure stores to artificially push volume into the market. Nissan is keen to improve the stair-step process because it believes the programs will help it increase U.S. sales and market share to 10 percent over the next two years.
"The key now will be our ability to plan." Fenton says. "The new procedure is for us to know what objectives we need to hit, and we're going to tie it to a yearly number.
"We're going to know way out in front now what our objectives are. We're going to know, 'I need to sell 150 cars this month, and they need to be 15 Versas, 15 Sentras, 25 Altimas,' or whatever the breakout is. We haven't been able to do that effectively in the past, to order and stock the right product to do it.
"It's going to be challenging for everyone to meet our volume targets," Fenton says. "But we feel there's a genuine commitment to give us the tools we need to meet them."
You can reach Lindsay Chappell at firstname.lastname@example.org.