Sounds like a plan: Nissan, dealers sidestep stair-steps
Nissan has made a commendable effort to work with its dealers in setting up an enlightened alternative to stair-step factory incentives.
On April 1, the automaker gave its 1,100 U.S. Nissan dealers 12-month sales goals, but it allowed them to plan how to achieve the targets. The dealers choose how to budget their advertising dollars and when to order vehicles to hit the targets.
Like other automakers, Nissan has used stair-step incentives to boost volume and balance internal supplies of individual models. Paying dealers bonuses to hit specific sales targets on short notice indeed helped the automaker increase its U.S. sales in recent years. But Nissan dealers complained that the short-term, all-or-nothing programs didn't give them enough time to plan or to order adequate stock to meet the objectives.
Jose Munoz, chairman of Nissan North America, and his executive team invested nine months working with the dealers to iron out the details of the new plan. He expects the change to make dealers more profitable. He's not being altruistic. He expects that better dealer margins will help the Nissan brand achieve its goal of a 10 percent U.S. market share.
Nissan also wants to increase its share of mind with dealers. That's a tall order, especially with dealers who maintain a portfolio of franchises.
The company is breaking with convention. It will take time to fine-tune the program, and both sides will need patience. But the approach has the potential to benefit both parties.