Nissan Motor Co.'s restructuring plan unveiled last week is more evolutionary than revolutionary, the brand's U.S. dealers said.
The "Nissan Next" plan formalizes the company's ongoing pivot away from rental-fleet business and toward retail sales in the U.S. market. And it addresses major retailer pain points — simplifying product lineup, reducing dealer inventory and trimming production capacity.
Those moves "instill confidence" among dealers, Nissan National Dealer Advisory Board Chairman Scott Smith said. "We want Nissan to right-size its business — develop vehicles consumers want, get them to them quickly and build to natural demand," said Smith, president of Smith Automotive Group in Atlanta. "Doing that will lead to sustainable volume and profits for the OEM and its dealers."
Nissan's new direction peels away from former Chairman Carlos Ghosn's market share-driven strategy of the past decade. A relentless focus on volume led to chronic discounting and a reliance on fleet sales, which dragged down residual values, dinged brand reputation and battered retailer profits.
In a letter to employees, dated Thursday, May 28, outgoing Nissan North America Chairman Jose Valls said: "We will become leaner and more agile, make our manufacturing operations more efficient, have strict fixed costs and concentrate on our strengths in areas like engineering … and electric vehicles."
Turning around the U.S. business will require doubling down on R&D investment, executing on product launches and more marketing, dealers say. "We need an advertising message that truly resonates with customers, and drives traffic to the dealerships because they see value in the product, not because it's the deal of the day," said Dave Wright, dealer principal at Dave Wright Nissan in Hiawatha, Iowa.
Nissan said it expects to have a 6.7 percent share of the U.S. market by fiscal 2023, down from a target of 8 percent. To adjust, Nissan also will cut production capacity. It will end a third shift at its Smyrna, Tenn., assembly plant and consolidate output of the Altima sedan in its Canton, Miss., factory.