As part of its plan to sell 200,000 more vehicles a year by 2004, Nissan North America Inc. is urging its U.S. dealers to go exclusive. But the factory is using neither a carrot nor a stick to do it, which could limit the participation.
Nearly half of Nissan's retailers are 'dual dealerships,' meaning two or more brands share a building or a showroom.
In early October, William Kirrane, Nissan Division general manager, sent letters to all 1,071 Nissan retailers telling them that 'in order to maximize the benefits of this product expansion and investment for you and Nissan consumers, it is critical you have exclusive, dedicated Nissan facilities, operations and management.'
Until now, Nissan let retailers claim a 'fixed wall' clause in their franchise agreements to qualify as an exclusive Nissan dealership. Under that definition, a Nissan-Subaru dealership, for example, was counted as an exclusive Nissan store provided the two enterprises were physically separate.
Kirrane told dealers that the fixed-wall designation has been eliminated. Henceforth, Nissan dealers are either stand-alone or dual.
Other franchises also have pressed their dealers to go exclusive over the years with mixed success. Even big franchises such as Chevrolet have dualed dealers.
The change in Nissan's definitions could affect a dual dealer in a major market who chooses to sell his or her dealership. Nissan now could require the prospective buyer to be an exclusive, complicating the sale.
'If you don't, you won't be penalized,' said Nissan spokesman Scott Vazin, explaining Kirrane's letter. 'You're not out anything. You still get the same allocation. There would be no changes in terms or incentives.'
But exclusive dealers typically are pampered more by the factory. For example, Nissan routinely sponsors a group of its exclusive dealers on a trip to the North American International Auto Show in Detroit. Exclusive dealers also might be invited to a product preview in Las Vegas, while dualed dealers wouldn't.
Pat Hoban, an exclusive Nissan dealer in Roswell and Decatur, Ga., and chairman of Nissan's National Dealer Advisory Board, said the change will not affect many Nissan dealers but shows a new desire for investment at the franchise.
'This is Nissan going from being a weak, indecisive and somewhat poorly managed company to being a company on the mend,' Hoban said. 'They are requiring the sort of things other franchises already require.'