Nissan will boost its marketing outlays by nearly 60 percent from last year and more than double the dealer sales-volume bonuses to help drive foot traffic at stores and lift dealer profitability.
The financially embattled automaker is facing rebellion from dealers, some of whom are walking away from the sales incentive program after Nissan decoupled some bonus money from hitting volume-based targets.
The incentive program changes, announced to Nissan's U.S. dealers Thursday, came on the same day Nissan Motor Co. cut its full-year operating profit forecast by 43 percent. Nissan posted a net loss of ¥26.1 billion ($238 million) for the October-December quarter — a performance that contrasts sharply with upbeat forecasts from rivals Toyota Motor Corp. and Honda Motor Co.
"We have been on a tough road, and we appreciate you sticking with us," David Kershaw, Nissan division vice president of sales and regional operations, said in a letter to dealers. "Our goal is to drive more quality traffic to your stores in 2020, to increase throughput and help you grow your dealer profitability."
Under the new dealer program, referred to as Nissan Drive 2020, retailers will receive additional financial incentives to sell down model-year 2019 vehicles.
Nissan also plans to increase the dealer volume bonus for the February-to-September sales period. The bonus will increase from the current $250 per vehicle sold to $550 per vehicle, a dealer source told Automotive News.
Nissan hopes the increased incentive will drive retailer participation in the automaker's sales incentive program.
In December, about 50 percent of the brand's dealers participated in the factory sales incentive program, down from about 65 to 70 percent two years ago, Automotive News reported on Feb 3. Some retailers said they are abandoning the incentive program after Nissan decoupled some bonus money from hitting volume-based targets. The diminished pool of incentive support is making it harder for many Nissan retailers to turn a profit.
About 40 percent of Nissan's dealers are now losing money or just breaking even, according to a dealer.
Nissan Drive 2020 is meant to support "the dealer's profitability and sales growth in the middle of a pretty challenging business environment for us," Nissan North America spokesman Chris Keeffe said.
Indeed. Nissan Division's U.S. sales slumped 8.7 percent to 1.22 million vehicles last year, in an overall market down just 1.2 percent. The company says the decline was partly a result of its strategic decision to cut back on its sales to rental fleet customers.
Nissan also is addressing another key sore point with dealers — the lack of foot traffic into showrooms. Dealers say more customers are taking a pass on the brand for what the retailers say are dated products in showrooms.
Nissan said it will dial up its marketing, launching new campaigns for the refreshed Titan full-size pickup and the redesigned Sentra compact sedan.
The new models are part of product offensive that has Nissan updating about 70 percent of its product pipeline in the next 18 months. Nissan will boost advertising on the NCAA March Madness basketball tournament, celebrity activations and social media.