Nissan says dealer profits a 2018 priority
Some Nissan dealers walked into their make meeting at the NADA Show concerned about falling store profits. They came out encouraged that Nissan has a plan to help them shore up profitability.
Dan Mohnke, Nissan Division's new senior vice president for U.S. sales & marketing and operations, told the dealers that the company will lay out details of the plan after the start of its fiscal year, which began April 1.
- Nissan vows to help dealers bolster profitability.
- Factory output will be reduced to relieve sales pressure.
- Plan for brand marketing shift, less reliance on leasing and sales incentives was scheduled to be released after April 1
He told them it will involve reduced factory production and lower U.S. inventories in an effort to relieve the pressure to sell vehicles at discounted prices, and less factory reliance on low-profit fleet sales.
Additionally, Mohnke said a flow of fresh product coming this year will help stir up dealer volumes and lift margins, under the new emphasis on more profitable operations. That flow starts with the new subcompact Kicks crossover this spring, targeted at entry-level buyers. It will be followed by a new-generation Altima sedan, and then redesigned versions of Nissan's other sedans.
He told dealers that Nissan will debut a new brand marketing strategy this spring, focusing on "Nissan Intelligent Mobility," the umbrella term that refers to new autonomous drive and advanced safety features.
Nissan wants to sharpen its identity in the U.S. market by focusing advertising on its advanced safety and autonomous-drive technologies.
"Profitability is the No. 1 issue on dealers' minds right now, especially as industry sales soften and interest rates increase," said Tim Hill, owner of Hill Nissan in Winter Haven, Fla., and 2018 chairman of Nissan's National Dealer Advisory Board. "There are some dealers who are looking for Nissan to help."
Hill and other dealers said after the meeting that Nissan factory officials did a good job of reassuring them that they are putting together a comprehensive plan to shore up profits in 2018.
Mohnke said his team knew going into the meeting that profitability was a key concern.
"We have been in close contact with our dealers about all this, and we're very well aware of their concerns about profitability," Mohnke told Automotive News after the meeting. "So hearing them express their concerns here today was no surprise. We really wanted to use the make meeting to tell them that we're working on it this year."
Some Nissan dealers attending the meeting said they are feeling the pinch of Nissan easing off its sales incentive programs. Many of them have complained for years about Nissan's aggressive use of stair-step programs to push dealers to sell more cars, regardless of profit margin. Incentive programs reward participating dealers with bonus checks every quarter, and those checks can represent a significant piece of a store's profits.
But last July, Nissan began scaling back on the programs. According to some dealers at the make meeting, the immediate effect was lower quarterly bonus checks from the factory.
One Nissan dealer who asked not to be identified said his checks are running 30 to 40 percent lower than a year ago, which reduces his store's overall profit margin.
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