Nissan Motor Corp. U.S.A. has joined the market-area retail revolution that favors fewer dealers and larger territories.
Brian Smith, owner of Dick Smith Nissan, with four locations in metro Columbia, S.C., and Byrne Owens, chief of operations for Mossy Nissan, which has four locations in San Diego County in California, are participating in a Nissan pilot called Contiguous Marketing Organization. Under the program, a single dealer owns all or most of the Nissan stores in a market.
Todd Seth, an owner of Coggin Nissan in Jacksonville, Fla., has been awarded a second Nissan franchise under the program. Seth said he will break ground for his second store soon in a bustling retail area on the city's south side called 'The Avenues.' He said the dealership should be operating in nine to 12 months.
According to the Nissan dealers, Contiguous Marketing Organization takes a Saturnlike marketing approach that calls for fewer dealers, larger territories and dealer-owned satellite service centers.
'My understanding is that we look at a market area instead of a particular location, and determine how to best serve that area,' Smith said. 'We have four locations with parts and service, but we might determine that a quick-lube center is warranted in a specific part of town.
'We try to sell cars the way consumers want to buy them; we try to make the selling process smooth and not have the going back and forth,' Smith said.
Nissan spokeswoman Pat Healey said Contiguous Marketing Organization is 'something Nissan is exploring; it's still very conceptual.' She declined further comment.
The market-area trend started when Saturn Corp. named its first 26 dealers in 1989. Unencumbered by a pre-existing dealer body, Saturn allowed a single dealer to operate all Saturn dealerships in a wide territory. That eliminates the pressure of dealers selling the same product in the same area, and allows Saturn retailers to use haggle-free pricing.
Several manufacturers, such as BMW of North America Inc. and Saab Cars USA Inc., want to copy at least some of Saturn's retail policies.
General Motors and Chrysler Corp. have announced that they want to have fewer dealers.
Ford Motor Co. took the trend a step further this month when it proposed acquiring control of 18 Ford and Lincoln-Mercury stores in the Indianapolis area and replacing them with about five megastores.
Volvo Cars of North America Inc. is consolidating its dealerships.
In a speech at the Automotive News World Congress in January, Nissan President Robert Thomas agreed that the retail auto industry is overdealered and needs an overhaul. While not being specific about Nissan's retail network, Thomas said manufacturers must slash the number of dealers, but not necessarily the number of store locations, to compete with large, publicly owned dealership groups.
According to Thomas, several weaknesses in the current retail system add thousands of dollars to the vehicle's price, including redundant distribution systems and excessive spending on advertising and incentives.
Nissan had 1,086 franchises on Jan. 1, 1997, four fewer than it had on Jan. 1, 1996, according to the Automotive News dealer census.
DEALER HAS OPTIONS
Seth said he has the option of operating his second Jacksonville store as a separate dealership or as an extension of his existing store with shared advertising, and perhaps one set of mangers who are responsible for sales, service and fixed operations at both locations. There are four other Nissan dealers in his area.
'I spend $100,000 an month on advertising; maybe I can spend the same $100,000 for both locations,' said Seth, who retails about 2,400 new Nissans annually. 'It's a work in progress.'
Smith owns all four of the Nissan stores in the Columbia area; two are in Columbia, one is in Lugoff, and one is in Lexington (see map). The stores collectively retail 150 to 200 new Nissans a month.
The Mossy organization owns four of the six Nissan stores in San Diego County. Mossy plans to open a fifth store this summer, Owens said. Mossy's stores are in National City, Encinitas, Escondido and San Diego. The fifth store is planned for San Diego. The four stores collectively retail about 535 new Nissans a month, Owens said.
The processes being put into place at the Mossy and the Smith dealerships are addressing many of the concerns outlined by Thomas in his speech.
Both have incorporated one-price selling in an effort to make the buying experience more pleasant.
Also, both are experimenting with computers and kiosks that will allow consumers to see each store's new- and used-vehicle inventory, compare Nissan's products with those of competitors, view vehicles' sticker prices, and figure monthly payments.
Owens said there are efficiencies to having several stores in the same area. For instance, Mossy Nissan uses the same advertising for its four stores. Also, Mossy is able to carry a wider selection of vehicle colors and equipment packages with its current four stores than it could carry with only one or two stores.
Mossy also owns Nissan stores in Phoenix and Houston; an Oldsmobile store in Houston; and Ford and Acura stores in San Diego.
Smith, a second-generation Nissan dealer, said his company consisted of a single Nissan store in Columbia for 23 years until the early 1990s, when it acquired its second store in Columbia. In 1996, he opened his third store in Lugoff and his fourth store in Lexington. Smith also holds Infiniti, Chrysler, Plymouth, Dodge, Pontiac and Oldsmobile franchises, and owns three used-car stores in the Columbia area.