While automakers such as the Detroit 3 walk away from the sedan market in the U.S., Nissan is standing its ground.
The Japanese automaker recently redesigned its high-volume Altima sedan. This year, Nissan will launch redesigns of the Sentra and Versa compact sedans and a refresh of its flagship Maxima sedan.
Also on tap for 2019 is a longer-range, all-electric Leaf, which was shown at CES this month. The new Leaf is powered by a 62-kilowatt-hour battery and has up to 226 miles of range, compared with the current-generation Leaf's 150 miles.
A longer-range Leaf will be practical for more consumers, said Tim Hill, chairman of the Nissan Nationial Dealer Advisory Board.
"Extended range opens up a broader base of potential EV customers," Hill, 51, said. "That, combined with a growing infrastructure, will help continue to grow demand for electric vehicles."
Passenger cars account for about 31 percent of U.S. light-vehicle sales, down from about 50 percent five years ago, according to AutoForecast Solutions.
So why is Nissan sticking with sedans when Americans are gravitating toward crossovers and pickups?
There are currently more than 6 million car owners in the U.S., said Hill, owner of Hill Nissan in Winter Haven, Fla. That market is not going to go from 6 million to zero overnight, he said.
"As other manufacturers pull away from [the sedan] business, Nissan dealers are happy to continue to play in that segment," Hill said.
Lower-cost, more fuel-efficient sedans remain popular among millennials. Younger car shoppers "prefer sedans, provided they have great style and technology," Hill said.
He talked about this and other issues facing Nissan dealers with Staff Reporter Urvaksh Karkaria. Here are edited excerpts.
Q: What was 2018 like for Nissan dealers?
A: It's been a transitional year. We went from a focus on sales-based dealer incentive programs and lower-margin fleet sales to a greater focus on growing the retail business. Fleet tends to fluctuate more than the retail business. We have a lot of positive momentum going now. The hard part is behind us.
What's the outlook for 2019?
Although we may see the industry demand pull back slightly, due primarily to interest rate hikes, economic indicators remain generally positive. In relation to Nissan specifically, I am optimistic due to the steady flow of new product we will see over the next few years. Denis Le Vot [chairman of Nissan North America] has stated that nearly 70 percent of our volume turns over in the next two years. We are going from having one of the oldest portfolios of vehicles, to the newest.
With the introduction of all the new products that are coming over the next two or three years, that creates great opportunities for Nissan.
What are some major issues on the dealer advisory board's agenda?
The most important issue will remain improving dealer profitability at a faster pace by growing healthy, sustainable retail sales.
With the amount of new, exciting product coming over the next few years, this is the opportune time for Nissan to increase its investment in the U.S. When you have new products coming, this is the time to invest more in the marketing and getting the word out ... to really gain market share against the competitors, to make everybody aware of all the new products and technologies.
Another focus will be on digital — from the marketing we do digitally because so much of the business is shifting that way, to the online buying process. Year after year more and more people complete more of the buying process online.
What is the most exciting product for 2019?
The Kicks [crossover] has been tremendous in attracting new customers to the Nissan lineup. It's attracting people from all brands and delivers great style, performance and class-leading features for an affordable price. Excitement around this vehicle continues to grow.
Availability of the all-new Altima will continue to improve in the new year. This vehicle far exceeds the competition, delivering the best technology. The all-wheel-drive Altima models are reaching showrooms now and will boost sales throughout the country, especially in areas that receive snow and rain. Accord and Camry do not offer awd, the domestics have pretty much pulled out of this segment and the Altima has unique capabilities in everyday driving.
Refreshed flagship vehicles Maxima and Murano will be arriving soon and are important to the franchise. While Altima and Rogue are the volume models for Nissan, Maxima and Murano kind of shape the brand for Nissan. These vehicles always deliver new and loyal customers into our showrooms.
Why are the Sentra and Versa significant nameplates for Nissan?
These vehicles are important to the Nissan brand because they offer an opportunity for customers to purchase a new vehicle with warranty and dependability at the price point of a pre-owned vehicle. This is a good way to welcome new customers to the Nissan family. Sentra and Versa are volume vehicles for our franchise.
You've said the 2019 Frontier will be a focus of the brand going forward. How important is the Frontier?
Frontier is one of the older body styles in our lineup. But, it still wins awards and sells well. It's an important segment for us. The new Frontier is going to be built in Canton, Miss.
Nissan made a marketing push on the full-size Titan pickup. How has that turned out?
We have a goal to increase Titan share by at least 1 percent this year. We believe the Titan can compete well with the domestics that control this segment. Improving in this area will help improve dealer profitability. It's important to Nissan and the dealers that this truck succeeds. There's a lot of opportunity in that segment.
Nissan introduced the redesigned Altima last year. Why is that an important launch?
Although some manufacturers have pulled away from sedans, Nissan has recognized there is still significant volume in this segment.
Customers have been excited about the Altima's sporty, sleek stylish new body style. The Altima offers the latest and greatest of technology and does so at a price point that almost everyone can afford. Demand is high for the new awd Altima in areas of the country that experience snow. I believe we will be able to sell the awd in my area, Florida, as it also performs extremely well in heavy rains.
Nissan North America is trying to shift away from fleet sales, incentives and high-volume inventories to focus on dealer profitability. How is that working out?
We are starting to see more consistency and the business we are doing will be more sustainable. The sudden change in direction wasn't without pain to the dealer body. We have now seen profitability start to stabilize, but dealers need to see their profits increase at a more rapid pace.
Much of the sales loss dealers are experiencing was not profitable business for the dealer. A major factor in the lack of profitability is the rising cost of inventories. Nissan and the dealers have worked hard to right-size dealer inventories and we have seen profitability begin to stabilize. In a little over a year, dealer inventory has gone from 340,000 to around 260,000.
Are current stair-step bonus targets set fairly?
The focus has shifted toward building the brand through increased marketing and offering competitive incentives. The goal is to de-emphasize stair-step programs.
Although, the majority of dealers hit their targets, the Nissan dealer advisory board will continue to push for consistency and less emphasis on objective-based programs, which can be unreasonable. That leads to bad behaviors and a reliance on [less profitable] fleet sales. The goal is to set stair-step bonus targets based on current market conditions.
How are rising interest rates affecting dealerships?
Rising interest rates have negatively impacted dealer profitability. When you have high inventories, as we had in years past, and then interest rates rise, it's just an increased expense. Dealers have worked hard to right-size their inventories. We're at that point now.
New-car margins are getting squeezed throughout the industry. What are Nissan dealerships doing to help profitability and reduce expenses?
Nissan dealers must manage their inventories effectively to maximize profitability. There is a big opportunity for Nissan dealers to improve our aftersales businesses. Nissan is helping by dedicating assets, training and developing programs that will help dealers improve in this area.
Dealers have increased sales of pre-owned and certified pre-owned vehicles to help with profitability.
How is the effort going to improve aftermarket sales across the dealer network?
There is an enormous effort from Nissan to help dealers improve aftersales and customer retention in service. It's been proven that customers that continually service with you as a dealer are more apt to come back and buy their next car from you. Nissan has developed programs and training for our network that includes best practices found across the industry.
Is Nissan doing enough to promote certified pre-owned sales? How so?
Nissan offers programs including customer cash and special financing on certain models. Certified pre-owned sales have risen over the past several years. CPO customers are more likely to remain loyal to Nissan and purchase a new vehicle in the future.
Nissan is positioning itself as a technology brand, highlighting ProPilot and other technologies. Why does this tech-oriented strategy make sense and how is it being received in the marketplace?
Nissan's goal is to provide as much technology to as many customers as possible. That is why you will see Nissan's technology throughout the model lineup, not only in the upper trims.
For 2019, Safety Shield 360 [automatic emergency braking with pedestrian detection technology] will be offered on five Nissan models — Altima, Rogue, Rogue Sport and the new Maxima and Murano. By 2021, Safety Shield 360 will be offered as standard equipment on more than 1 million Nissan vehicles annually.
How are dealers responding to NREDI 2.0, Nissan's new dealership design guidelines?
Dealers who have completed the new 2.0 facilities have spoken highly of it. They have said it is easier to deliver a positive customer experience and have also found it easier to attract and retain employees. It's just a much more relaxed atmosphere. Walking in, it looks like a place you'd like to hang out in. It feels more like an Apple Store that sells and services cars.
You've been complimentary about the role Carlos Ghosn played in rescuing Nissan and positioning it for profitability. What happens to the brand now in his absence?
Mr. [Hiroto] Saikawa remains the CEO of Nissan globally and he has been involved and supportive in the Nissan strategy of promoting healthy, sustainable retail growth currently underway. The news regarding former Nissan Chairman Carlos Ghosn came as a surprise to everyone.