It is shaping up into a year of "I told you so" for Jose Munoz, chairman of Nissan North America.
Just as he and his U.S. team vowed a year ago, the Nissan brand's U.S. sales are increasing; market share is rising; Nissan outsold Honda for the first three months of the year; new products are being launched more smoothly; dealer profitability is up, and the factory has ironed out some of the prickly issues on factory sales incentive programs that have vexed dealers.
Nissan is doing well, says Munoz, 48, but it can still do better.
Munoz spoke at his office in Nashville with Staff Reporter Lindsay Chappell and News Editor Dave Guilford.
Q: What are your key goals for this year?
A: Obviously, we want to grow profitably. We want to increase the business in a way that our operating margin also increases. And to do that, our dealers have to enjoy the same growth margin.
A lot of people in this industry think that if dealers make more money the OEM makes less, and the other way around. I learned many years ago that that's not the case. Now that we're growing, we're growing profitably, and our dealers are growing profitably.
When they see more return, they get into a positive cycle. They keep investing; they keep bringing their best people to it; they focus themselves more on the business, and the results are better.
Last fall, Nissan Motor Corp. CEO Carlos Ghosn was very candid in expressing frustration with Nissan's progress around the world and said he wanted things to move faster. Is that a challenge that the American market shares?
I agree with him that there is always room for improvement. I don't know if he still thinks we are too slow, but I think we can do better. A year earlier, we had a tough year where we lost share. This year, we're gaining the momentum. I believe we're now in a position to grow faster.
Take the example of our dealers. A year ago, we were just beginning to explain to the dealers that we had a plan for growth, that we were going to announce new models, that we wanted to work together with them to change the way we operate our stair-step programs. A lot of dealers were reluctant.
But now they see we really are doing what we said we'd do, that we're working with them the way we said we would. We're growing at the pace we said we would. So they've become more confident in the plan.
What can you tell us about the new stair-step plan you have developed with Nissan dealers?
It's very unusual. And, to be honest, it took us quite awhile to get there.
All dealers in one way or another were complaining about the programs we had in place. I was thinking to myself -- "Wow!" At Nissan, like everybody else, you have your fixed margin, your variable margin, and then over and above that, if some results are achieved, you earn a kind of additional bonus.
That should be positive because it's something you get on top of everything. How has something that's supposed to be positive turned out negative?
In talking to the dealers, they told me: "Well, for this month, only these models count, and these other models don't. Next month you pay for this, but you don't pay for the others. You don't give me visibility on whether I want to buy models for one month or two months. And then when you're closing the quarter, you always change the conditions."
One of the key elements for them was planning.
So we came to the idea, which is very simple, that we share our plans for the year with them. We tell them that "We expect you, Dealer A, to sell 1,500 units this year. And if you do, you will get this added bonus. Here is what we expect to be sold by quarter, but if something goes wrong, you can recover."
They thought the objectives would be impossible. But the initial reaction we got was quite positive. The dealers are saying this is reasonable.
When the dealers know you have a consistent program in place in which all cars count and all cars pay, they can have people doing a steady job every day -- not crashing and throwing money out of the window this month and doing nothing next month.