Help is on the way for Infiniti dealers thirsting for product

Product is the lifeblood of automotive retail. And Infiniti's 201 U.S. dealers are desperate for new metal.

"Product is king," Steve Lapin, Infiniti National Dealer Advisory Board chairman, told Automotive News. "Infiniti doesn't have the right products right now to compete in the marketplace."

A dearth of an updated lineup has dragged Infiniti's market share and dealer balance sheets. The brand's share of the luxury segment has dropped 4.4 percentage points from 2018, according to the Automotive News Research & Data Center. Infiniti delivered 64,699 vehicles in the U.S. in 2023, ending a five-year streak of sales declines.

But help is on the way. Infiniti vows to execute an ambitious product overhaul to deliver four new or redesigned models by the end of 2027. And at a meeting last summer, the brand's retailers were shown what that road ahead looks like.

A redesigned, six-figure QX80 flagship crossover arrives this summer, while a sporty QX65 crossover coupe comes in 2026 — the first all-new addition to the portfolio since 2021. A pair of battery-powered vehicles — a sedan and a crossover — will follow in the second half of the decade.

"It is a new dawn," Craig Keeys, group vice president for Infiniti Americas, told Automotive News last year. "We're going to invest more deeply into our retailers."

But Lapin and his fellow dealers are worried about getting by in the meantime. Infiniti needs a plan to help bridge its retailers financially "until we have a more plentiful palette of products," said Lapin, CEO of Achievement Automotive, which operates an Infiniti dealership in Thousand Oaks, Calif.

Lapin, 73, spoke with Staff Reporter Urvaksh Karkaria about the products, challenges and opportunities Infiniti dealers should expect in 2024. Here are edited excerpts.

Q: What are the top issues affecting Infiniti dealers in 2024?

A: The model portfolio is long in the tooth. It will be tough, unless Infiniti decides to increase marketing and incentive spending.

We're putting pressure on Infiniti to expedite these models … and increase more products than they are showing.

These dealerships were built on promises made to us of 150,000 units.

At last year's annual retailer meeting, Infiniti said it plans to boost sales to 100,000 vehicles by mid-decade. Is that realistic?

The mid-decade target is ambitious. But if [Infiniti] produces the products they have committed to and adds more to that over the next three to five years, 100,000 units [in annual sales] is in the bag.

We need Infiniti to expand into more affordable product segments, especially entry-level crossovers.

Infiniti missed the mark by not bringing hybrid vehicles to the U.S. The technology is a good compromise. It delivers electric drive performance without range anxiety. Some hybrid vehicles can go 150 miles on battery power only.

How can Infiniti drive throughput until the all-new vehicles arrive?

We need a bigger marketing budget for 2024. And it must be more product-focused than story-driven. Let's show our cars' technology and design because they are tremendous.

Incentive spending also needs to pick up because of the age of our portfolio.

How was Infiniti's days' supply last year?

2023 started relatively benign. Then, as demands softened, cars started to pile up.

We were at 90-plus days at one point, which is way too high. The goal is to reduce that to a 45 to 50 days' supply by the end of this year.

Infiniti has realized it can't stuff cars on dealers anymore because the holding costs are too high. So they are holding cars back now in port, which is very helpful to get supplies out.

[Infiniti] is delivering cars to retailers when needed rather than when they have them.

As demand softens, is there concern that Infiniti could return to the old ways of dumping cars on retailers?

That's always a fear that we have. We can only control what we can control. We are working very hard to keep the supply in check.

How was dealer profitability last year?

It was one of the worst years ever in the history of Infiniti. Floorplan costs rose two to three times due to rising interest rates and inflation.

Infiniti must bolster dealer profitability with a bridge plan to help us get through 2024. It would help offset some of the rigorous expenses being incurred right now.

The pandemic-related supply shortages hid the brand's systemic problems by boosting dealer profitability.

According to Kerrigan Advisors' annual dealer survey, Infiniti was the fifth least-trusted brand — with 37 percent of retailers saying they did not trust the brand. What's driving the dissatisfaction?

Infiniti must increase its retailers' happiness quotient.

Profitability equals happiness. Happiness equals trust. Low profits and sustained losses equal dissatisfaction.

The fix to all this is product. Too many promises were made and too many promises were broken by the last regime when it pertained to products.

We're hopeful [current management] lives up to the commitments and promises that have been made. That will solve the dealers' distrust of the brand.

With electric vehicle demand in the U.S. softening, has Infiniti dodged a bullet by being slow to the EV game?

Everybody but Tesla is suffering with EVs right now. Nobody else has really figured out how to sell electric vehicles. Elon Musk certainly owns the market.

Mercedes-Benz and BMW went into the EV market full blast and were sorry they did it.

But while consumer demand for EVs has cooled, Infiniti needs a battery car [sooner than 2027] to show consumers we have the technology. People come in asking for it all the time.

You can stick your toe in [the EV segment], but you don't have to jump all the way in.

How do you expect EVs to affect retailer margins?

I don't know three years from now how they'll attack it — if they'll give us more margin or less margin. The problem is it costs them so much to build these things. Look at Ford — they're all messed up on EVs.

Infiniti is going upmarket with the redesigned QX80 — aiming for Cadillac and Lincoln with a $100,000-plus price point. Does that strategy make sense?

Some of the technology [in the flagship crossover] is extraordinary.

Will it be a car and price point that people will flock to? That's the gamble that Infiniti is taking. They've made the decision that they can play in that marketplace. We will find out.

The QX80 is popular in the South. More than half of all the production is probably sold in Texas. Those dealers are extremely excited about the new car. They think it is a win-win, and they can compete with [Cadillac] Escalade and anybody else with that car.

Nissan will introduce an all-new Infiniti QX65 crossover in the middle of next year. What niche does the model serve?

The QX65 is a Lexus RX fighter. It's a two-row QX60 — a five-passenger [vehicle] with a lot of luggage space. It's got an aggressive design that won't appeal to the soccer mom.

What needs to be added to Infiniti's model lineup?

Infiniti needs entry-priced crossover and sedan models. I would like to see an Infiniti priced in the high $30,000- to mid-$40,000 range.

Lexus' entry-level NX is a plusher [Toyota] RAV4. Lexus sells a ton of those.

Infiniti last year debuted a new image standard. How is the network reacting?

Infiniti is not making us all rebuild. You'd have a revolt if they did.

It doesn't affect retailers who have updated their stores in the past five to seven years. But if you build or renovate a facility, you must adopt the new standard.

How is the used-vehicle business for Infiniti retailers?

Used vehicles are essential. Resale vehicles have become the entry point for many consumers to the Infiniti brand.

But there's been a wild swing in used-vehicle prices that needs to normalize. There was no supply during COVID and used-car prices went crazy. Then, as we came out of the pandemic, lease returns started to come back in droves, which hurt [certified pre-owned] prices as supply mounted.

The factory must support us with a competitive CPO program that delivers quality and value to the consumer while protecting retailer profitability.

How is Infiniti helping dealers grow fixed operations?

Increased sales volume feeds the fixed-ops business. Units in operation are the lifeblood of our service drive.

Last year, Infiniti introduced a three-year complimentary maintenance program on new-car sales. That will pay dividends and drive loyalty to franchised dealers.

The idea is to make it a habit for people to visit the dealership for maintenance. If they don't have to pay for it, there's no reason why they won't come in.

What improvements do you suggest for the Infiniti@Home digital shopping platform?

Consumers like the ability to do everything digitally. But Infiniti must do more to create awareness about the shopping platform. People don't know about it when they come into the store.