Nissan dealers give CEO an earful

In his first meeting with U.S. dealers, Nissan Motor Co.'s newly minted CEO Makoto Uchida faced a volley of pointed questions but offered few answers.

A group of nine retailers gathered in a conference room at Nissan North America's headquarters in Nashville and urged the visiting Uchida to take action on several fronts. They asked for faster product updates and greater marketing and incentive support, according to dealers at the meeting. They expressed frustration with slumping residual values and profitability at the Nissan brand, and they sought assurances of a game plan to lift Nissan's reputation in the U.S. from what some retailers have described as a "bargain-basement brand" perception.

Uchida, who must steer Nissan through an existential crisis, came to the dealer meeting seeking unvarnished feedback from the front lines.

"I want to know all the negatives," a dealer in the room quoted the CEO as saying. "I'm here to listen, don't hold anything back — even if it's hard for me to hear."

He got what he asked for.

"We gave him an hour and a half of reality," one of the dealers, who asked not to be identified, told Automotive News. "We didn't pull any punches. We were brutally honest."

Uchida, who took control of the global automaker on Dec. 1, called the meeting with the Americans at a critical time. Nissan's U.S. dealer partners are voicing new worries about its strategy and market performance in the brand's biggest market.

Nissan North America's U.S. sales tumbled 9.9 percent to 1.35 million vehicles last year, in an overall market estimated to be down just 1.2 percent. The automaker's U.S. market share, meanwhile, dropped to 7.9 percent last year, from 8.6 percent the prior year, according to the Automotive News Data Center.

The company has emphasized that the decline is partly a result of its decision to cut back on its sales to rental fleet customers. But retailers remain edgy.

Uchida acknowledged that the U.S. market could make or break the company, according to another dealer in the room.

"He was saying it will require a team of people to make this thing right, but that we'll get there," the dealer said.

At the meeting, attended by Nissan North America Chairman Jose Valls and other top U.S. executives, the dealers urged Uchida to give North American management greater autonomy to run the U.S. market, according to a retailer in the room.

Dealers asked for more financial and marketing support from Japan to prop up U.S. sales until a wave of new products arrives. Nissan now has one of the oldest product portfolios in the industry but expects to renew about 70 percent of the lineup in the next 18 months.

One dealer told Uchida that, "if you don't [provide] all the resources today, the check later on is going to be even greater," according to one of the meeting's attendees.

In Uchida, the dealers might find a receptive ear. The executive previously ran Nissan's automaking business in China with a reputation for valuing local autonomy. According to those who worked under him in the past, Uchida believes that because regions deliver the results, the role of corporate headquarters is to support the regions.

The dealers urged the CEO to rethink Nissan's ever-divisive U.S. sales incentive program, which financially rewards retailers for meeting sales targets. The program came into being several years ago to incentivize retailers to boost their store throughput. But it has earned scorn for what some dealers claim has been hard-driving factory sales pressure on its franchisees.

Some dealers have told Automotive News that they find it difficult to remain profitable while chasing the factory's sales targets. According to one of those in the meeting, Uchida was told that Nissan needs a new incentive program that dealers will want to participate in.

Dealers emphasized an urgency for Nissan to better define the brand in the U.S. and give retailers a reason to be optimistic. The group told Uchida that something needs to be done to move Nissan to top-of-mind awareness among shoppers, one dealer reported of the conversation.

Those in the meeting said Uchida nodded and took "loads of notes" and assured the group that he's committed to reducing rental fleet sales — part of a tough-love strategy laid out in May by former CEO Hiroto Saikawa to reduce price discounting — even if it hurts volumes in the short run.

One dealer told Uchida that situation is having the ripple effect of lowering transaction prices on retailers' used cars.

The meeting aired dissatisfaction with Nissan's technology-focused marketing strategy, according to those present.

"Our technology message is getting lost in translation," a dealer recalled Uchida being told. "Self-driving cars may be great in Japan or different parts of the world, but [in the U.S.], people are not responding to it."

Uchida was light on specifics about exactly how Nissan plans to turn the company's U.S. fortunes around, according to those in the meeting. They said Uchida asked them for continued patience, assuring them that "we have a plan" to fix things.

The dealers who spoke to Automotive News said they walked away from the meeting with more optimism.

"Uchida is not coming with a silver bullet, and he doesn't have a cure for cancer," one said. "But he showed up. He said, 'Give me an opportunity, I want to see how fast I can get things done here.' "

Another attendee contrasted Uchida's style with that of former Nissan Chairman Carlos Ghosn, who was fired from the company last year amid a criminal prosecution in Japan for alleged acts of financial impropriety. Ghosn, who denied the charges, recently fled Japan for Lebanon.

"Uchida is humble and very interested in everybody's opinion," the dealer said. "It's not 'his way or the highway,' which was Carlos Ghosn's mentality. No one in the room ever dared tell Carlos Ghosn what he didn't want to hear."