Nissan dealer Brad Fenton wasn't planning to serve two consecutive years as chairman of the brand's national dealer advisory board. But Nissan has been going through so much change in recent months that Fenton agreed to stay on for another half a year to provide a little continuity. The board reorganized in 2013, creating regional subcommittees and subject subcommittees that meet monthly, involving a larger number of dealers from around the country.
Fenton, 60, who owns the multifranchise Fenton Motors, with seven Nissan dealerships in Oklahoma and Missouri, will step aside for a new chairman in July. He has worked with the factory and its new North American head Jose Munoz as it attempts to push the franchise into a new phase in the United States. Nissan CEO Carlos Ghosn's goal is to attain a 10 percent U.S. market share by March 2017, up from just under 8 percent now. Fenton says he is bullish on the plan, and in 2013 acquired two more Nissan stores. He spoke with Staff Reporter Lindsay Chappell.
Q. Jose Munoz, who had great success running Nissan in Mexico, recently was promoted to run Nissan in North America. How is your relationship with him? Is this a good turn of events?
A. Absolutely. It's very positive. We've met many times. Jose has been aggressive in increasing sales and improving dealer profits for the past year as head of sales, and he's demanding that all of his folks be more dealer-centered in moving us forward. And that goes to sales, finance, advertising, parts and service.
He's making believers out of many of us. There were skeptics. They said, you accomplished a lot as head of Nissan in Mexico, but can you do it here in the U.S. market too? And we really see it happening now.
What makes you optimistic looking into 2014?
It's all good for us. Nissan is making a commitment to build more cars. And to the dealers, that says they're committed to selling more cars. The big restrictions for the past couple of years have been quantity and availability. I'm excited about the opening of the new assembly plant in Aguascalientes, Mexico. The models they're going to build there, the Sentra and Versa, have been in limited supply for us until now.
It's surprising that supply has been limited. We've gone through a severe recession, when the general impression has been that car factories everywhere had plenty of excess capacity. Is that wrong?
Yes, it is for some cars. The commitment last year was for producing more Altimas, and then for producing more Pathfinders. When it came to the Sentra and Versa, it has been tight. We've been splitting production between Sentras and Versas, and also sharing what capacity we had with other parts of the world. The new plant fixes that.
One of Nissan's big initiatives is to give more business autonomy to the various national sales regions. What's the benefit of that to retailers?
There are a lot of benefits. One of them is simply model mix -- not sending us Maximas when we want Pathfinders, or vice versa. It's tailoring the product mix, equipment mix, color mix -- all those things that affect the inventory we stock.
But it's also being able to tailor the marketing to a more regional basis, and design our incentives to a regional market. Leasing is a lot different on the East Coast than it is in the Central region. You know, what happens in New Jersey or California isn't necessarily what's happening in Dallas and Chicago. It helps me more if I can talk over an issue with somebody here in this region, who's seeing the same things I'm seeing, than somebody who's sitting in a central office.
It will also make a difference if we give more authority to people close to the market on decisions that directly involve the dealer and the customer. It will make a difference if we can let people here make decisions, instead of us having to call a national hotline.
What were the changes made to the dealer advisory board this year?
We had a strategy meeting in May with Jose and his management team to talk about how we can improve communications. Jose is big on accelerating our progress, and he even has an acceleration office to speed up improvements.
We decided to break the DAB into subcommittees. And each region will have representatives on each of the subcommittees. Each region will have a dealer advisory board, with some members elected by dealers and some appointed by the regional manager. Those groups will meet monthly. Then there are seven national subcommittees, for franchise value, sales, finance and insurance, aftersales, advertising, product and product quality and customer experience. Each of those has a chairman, and two of their members make up the national dealer advisory committee.
You can see the amount of work that's going into all this. If you're a dealer on the national board, you end up also being on a regional board and a national subcommittee. That's a lot of meetings. But it's also a lot more involvement by a bigger number of dealers.
And you yourself have stayed on for a second year.
We decided that our board schedule didn't line up well with Nissan's. We would just be getting settled at the first of the year as Nissan's fiscal year was coming to a close in March. You'd have new people coming in who might not know what had been in the works already. It made things a little awkward.
So we've changed our board schedule to start in the summer now. And for 2014, since we've just reorganized so much of it, we thought it made more sense for everyone to just stay on through the summer.
At the same time, Nissan and your board recently rewrote the factory's rules and procedures for stair-step programs -- which Nissan doesn't call stair-step.
We used to call the program Dealer Volume Bonus. It's now called Dealer Growth Program. It's basically a targeted plan where we're assigned sales objectives. Frankly, dealers hadn't been happy with the process. 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.
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.
We created a cross-sectional committee of about 50 dealers and Nissan folks to work on this as a group, and it's now in the final stage of approval with the franchise value subcommittee, which I chair.
The key now will be our ability to plan. 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.
Jose has firmly committed to making it work -- he is behind the plan of "right car, right place, right time." He's committed to giving us what we need to achieve it. There is significant incentive for dealers who can.
Is it going to be universally embraced?
It's always hard to get 1,000 people to agree on anything, but I believe so. It's going to be challenging for everyone to meet our volume targets. But we feel there's a genuine commitment to give us the tools we need to meet them.
Do any of the dealers feel like Nissan is simply asking too much of the franchise? When you guys hear the company say it's going to take a 10 percent market share by 2017, and it's going to increase profitability, does anybody ever say, maybe that's just not possible?
Sure. There are people who think, my gosh, that's an awful tall mountain. But car dealers are entrepreneurs, and Nissan dealers welcome the challenge. I like the enthusiasm behind it. I say, let's go take the hill. I want to grow my own company. And what I see is that Nissan has committed billions of dollars to growing theirs. So I'm with them.
Munoz and the company took the unusual step of reducing the manufacturer's suggested retail prices of several of its key models. Did that really help?
Yes, it did. It was very significant. We had a great summer when the new prices went into effect. It's been record month after record month.
But you know, it went further than the MSRPs -- they also adjusted the prices on the options and packages. One of the issues we've been facing is that people see great prices on our models, but they can't always get them. We have some great $20,000 cars that retail for $28,000 by the time we get them in the store. We told them that we want more of the models at the prices that customers are reading about. And they're listening to us.
So Nissan has improved the availability of cars at base levels and packages that are affordable. That was a positive step.
What's your hope for the next Titan pickup? Is there really an opportunity there?
Lord, I sure hope so, considering that I'm sitting here in the middle of truck country. I'm eager to get back into the truck business. It will be an important addition for us. I've spent countless hours lobbying for it and I want it. It's a significant step forward that Fred Diaz has come into the brand as head of sales, given his background with Ram trucks. He has already made some little tweaks to improve what's coming.
The Cummins diesel engine that we'll be getting in the new Titan is going to be a big addition, too. We've never had that to offer.
In the meantime, Frontier pickup sales have been moving up for the past several months. What's going on there?
There's a lot of demand for Frontiers. We just let the truck segment wander away from us. And I think we dealers just got a little lax in requesting the product. And the production and the engines were going to other places.
We've stepped up and said, hey, we can sell more of these. We just need you to build more of them. I believe we can double or even triple what we've been doing in Frontier sales.
You can reach Lindsay Chappell at firstname.lastname@example.org