TOKYO - As Carlos Ghosn takes aim at Nissan Motor Co.'s problems, the carmaker's Japan dealerships are in his cross hairs.
The Nissan COO, who was sent from Nissan's new controlling owner, Renault SA, to turn the Japanese company around, is scheduled to release a restructuring plan today, Oct. 18. It may include closing a plant, selling Nissan's aerospace and defense business and halting unprofitable model lines. But it definitely will tackle Nissan's troubled Japan sales network.
Anywhere from one-third to one-half of Nissan's Japanese stores, most of them owned by Nissan, are believed to be in the red. They have been a steady drain on the company, contributing to what this fiscal year will be the sixth loss in seven years.
Nissan steadily has tackled its problems abroad. Operations in Europe, the United States and Mexico have been pulled back into the black. That leaves Japan, and particularly the dealer operations there, as a glaring sore spot.
For all carmakers, dealerships in Japan are an inefficient lot. A survey by the Japan Automobile Dealers Association found that, in the fiscal year ended March 31, 1999, the average new-vehicle dealership had an operating profit margin of 0.0 percent.
One problem is dismal productivity. The average store sold only 4.0 new cars per month per sales staffer. When all dealership employees were counted, the figure slid to just 1.2 new vehicles per month per employee.
In an inefficient industry, moreover, Nissan is worse than most. For example, Nissan sold only 287 new cars per outlet in Japan last year, well below leader Mitsubishi Motors Corp.'s 457. The only major carmaker with a worse showing was Mazda Motor Co., with 172.
This year Nissan is combining its four domestic sales channels into two but has said it will not force any outlets to close as a result.
Ghosn will likely change that when he outlines his turnaround plans.