Ghosn's demand: Double Nissan's U.S. sales

YOKOHAMA, Japan -- Meager U.S. growth was Carlos Ghosn's biggest disappointment last year, and Nissan's CEO has responded by giving his team a big order: Double the brand's sales by 2017.

Ghosn has directed his U.S. executives to iron out the production kinks that snarled launches and to strengthen the dealer network. The plan calls for increasing the number of dealerships, doubling per-store sales and stepping up marketing to fast-growing demographic groups.

Speaking last week after Nissan Motor Co. announced results for the year that ended March 31, Ghosn said: "China was not our biggest, I would say, disappointment. It was mainly the United States. We were expecting a strong year in the United States. It didn't happen."

North American sales rose 4 percent to 1.47 million in the fiscal year that ended March 31. That was a record, but below expectations; a year ago Nissan had predicted sales would rise 8 percent to 1.5 million.

U.S. sales rose 5 percent to 1.1 million units, also a record. But market share fell to 7.7 percent, from 8.2 percent, putting Nissan further behind in its quest for 10 percent.

Sales were hurt by late launches of the redesigned Altima sedan and other vehicles. Nissan felt the burden of hiring 5,000 employees and simultaneously launching five models, said Colin Dodge, executive vice president in charge of the Americas.

"We really stress-tested our company, and we didn't quite make it," Dodge said. "It was far short of our potential. This year we've got quite an aggressive plan."

The goal for this fiscal year is a 12 percent increase in U.S. sales, to 1.3 million, and a 10 percent jump in North American sales, to 1.6 million.

The first step is smoothing out production. Nissan has fixed bottlenecks in supply and in product development, Dodge said.

The one exception is the Sentra compact sedan, which has a backlog of 50,000 orders. Extra capacity for that vehicle, now made in Mexico, won't come online until early 2014, Dodge said.

"Through this very difficult period of trying to do more than we were capable of, our North American operations are now going forward much stronger than ever," Dodge said. "If anything good came out, it was we learned what we're not very good at."

Jose Munoz, the newly appointed senior vice president of sales and marketing for the Americas, said the second step is improving the dealer network and lifting profits.

The target is doubling unit sales per outlet by the fiscal year ending March 31, 2017, he said. Nissan outlets currently average about 35 percent fewer sales per store than rival brands' stores, Munoz said.

In 2012, Nissan's U.S. dealers sold an average 959 units per franchise, compared with 1,491 at Toyota-Scion stores and 1,220 at Honda-brand franchises, according to the Automotive News Data Center.

"We want to reverse that," Munoz said. "We want to ensure that dealers with good performance have the possibility to grow."

Nissan aims to increase both the number of dealerships and the number of sales per outlet. Munoz didn't give details, but he said Nissan has targeted 40 U.S. markets for growth.

During the New York auto show in March, Munoz hinted at where Nissan might want to add dealers. "I see that we can do much better in several regions of the U.S. -- in the West region, in the Midwest region, even in the Northeast region, we can do better," he said.

Nissan also will boost marketing to fast-growing demographic groups, such as Asians, Hispanics and African Americans, that are wielding more buying power.

"These are the key strategies we are putting in place," he said. "This has already been seen in the results of April."

Last month, combined Nissan and Infiniti sales rose 23 percent, the biggest gain of any major manufacturer, compared with an industry increase of 9 percent. The automaker's April market share rose to 6.8 percent, from 6.0 percent.

But through April, Nissan North America's 2013 sales rose just 3 percent, trailing a market that was up 7 percent.

The last fiscal year's "disappointing" North American sales increase helped push Nissan's global sales up 1 percent to 4.9 million vehicles, as sales fell in Japan, China -- where angry consumers boycotted Japanese cars because of a territorial dispute between the two countries -- and Europe. Net profit inched up less than 1 percent to ¥342.45 billion ($3.64 billion), and revenue rose 2 percent to $102.27 billion.

The revenue and profit gains trailed those of rivals such as Toyota Motor Corp., in part because Nissan had better year-earlier results, when it bounced back faster from the March 2011 earthquake in Japan.