Editor's note: This report has been updated to clarify the location of a former Shaker Auto store.
If Nissan North America is to reach its ambitious goal of 10 percent U.S. market share by the end of March 2017, it may need to do something about its damaged reputation with dealers.
For proof, consider Massachusetts, where Nissan's market share is 7.7 percent, based on vehicle registrations, below its national average of 8.5 percent and well short of the target. Its efforts to gain ground there have rubbed many dealers the wrong way. The result is a retail network with some major holes.
In Boston, Nissan long has been looking to open two new stores, but it has no takers yet at a time when auto retailing is drawing new, well-heeled investors. Twenty miles to the west, Framingham Nissan sits dark, closed for the last three years after its owner, Shaker Auto Group, walked away from the franchise over the factory's tactics, according to two people familiar with Shaker Auto's decision.
Farther west, in Westborough, Glick Nissan is at odds with the carmaker. Nissan sent the store a termination letter, effective Thursday, Dec. 24. The dealership has filed a lawsuit against the company to stop the action.
More than a dozen dealers in Boston and elsewhere in the U.S. said they believe Nissan, after several years of rapid growth, now is setting unrealistically high sales targets. It employs stair-step incentives that, these dealers complained, end up causing them to sell cars at a loss to try to qualify for the incentives.
They also said Nissan uses hardball tactics with dealers who, in Nissan's view, are underperforming. After repeated warning letters, these dealers said, Nissan will push dealers to name a new general manager or ask them to sell their stores. At a national dealers meeting in May, the theme of the event, attendees reported, was "grow or go."
"Nissan has been the most aggressive manufacturer, in terms of dealership terminations, across the country," said Joe Roesner, president of Fontana Group Inc., a consulting firm in Tucson, Ariz. "That has negatively impacted the value of the franchise with current and potential owners."
Dealer Bill Wallace in Stuart, Fla., said Nissan always is playing "catch-up" to the Toyota and Honda brands, thereby continually raising the bar for dealers on sales volume, advertising and facility improvement demands.
"Quite honestly, they don't have the product to go toe-to-toe with Toyota," said Wallace, owner of Wallace Automotive Group, which has eight dealerships selling 12 brands, including Nissan. "When you have a really good second product, you're just running all the time, and I think the retailers feel tired, and they feel like they're catching the heat in all of this."
Michael Colleran, Nissan North America's Northeast regional vice president, based in Somerset, N.J., acknowledged that the company is demanding. "We are a measurement-based company," he said. "At times, performance management discussion can be uncomfortable."
He doesn't believe the approach the company has taken can be characterized as "strong-armed in any fashion." In his view, Nissan's methods are paying off. Sales in the Boston area are "accelerating." Most Nissan dealers across the country are profitable, he said.
Nissan has 26 dealerships in Massachusetts, with seven in the Boston area.
Through October, Nissan brand's new-vehicle retail sales in the state, based on registration data, were down 1 percent to 19,475 from a year earlier, according to the Massachusetts State Automobile Dealers Association in Boston. Sales at Infiniti, Nissan's luxury arm, were up 7 percent to 2,358.
While Infiniti counts toward is the 10 percent share goal, the dealer-factory friction centers on the higher-volume Nissan brand.
To gain share, Nissan wants to fill the retail voids. Colleran said the two open points in Boston and the dark point in Framingham "represent about a quarter of our share of our underperformance." Nissan is "working on those as we speak" and has "no shortage" of interested candidates, he said.
People in the Boston auto-retail scene said they see little rush to grab those openings. "They are offering dealerships to dealers, and dealers are saying no," said one person familiar with the Boston market and Nissan's activity.