Why are some Nissan dealers so unhappy? – Automotive News

LAS VEGAS — A funny thing happened to Nissan on the method to succeeding at its U.S. business plan.

It began alienating its dealers.

Funny?

The automaker hardly thinks so.

But as retailers gathered here for this month’s National Car Dealers Association convention, audiences seemed to nod in agreement at criticism that Nissan has actually used its elbows in its race to become America’s No. 2 import automaker.

Dealers that hold Nissan and others franchises say that by being confrontational fairly compared to collaborative, Nissan has actually become the hardest automaker to job with. Nissan North America, they say, sets unrealistic sales targets for Nissan dealers and regularly troubles letters of default or even termination notices to those dealers that skip objectives.

“My group is so demoralized on the Nissan side, no one prefers to job for my Nissan brand,” said a dealer that spoke on the condition of anonymity.

Nissan’s rise
U.S. rank of import automakers by market share, compared along with April 2011, the initial month of the fiscal year in which Nissan set its objective to be No. 2 in the U.S.

March 20161-month market share
1. Toyota Motor Sales13.80%
2. Nissan North America10.30%
3. American Honda8.70%
4. Hyundai-Kia8.40%
  
April 20111-month market share
1. Toyota Motor Sales13.80%
2. American Honda10.80%
3. Hyundai-Kia9.40%
4. Nissan North America6.20%

Avoiding Nissan

In speaking to a ballroom of retail group executives throughout J.D. Power’s Automotive Summit in Las Vegas on March 31, dealership buy-sell adviser Erin Kerrigan marveled that despite having exactly what she said is “nice throughput through their stores,” Nissan dealerships are commanding a lower-than-expected fee as quickly as owners sell.

“This is actually as a result of buyer demand,” said Kerrigan, managing director of Kerrigan Advisors in Irvine, Calif. “exactly what we’ve seen is that there is not the greatest dealer relations along with the OEM along with this franchise. So as a result, people Prevent Nissan.”

At that comment, her previously silent audience — including some Nissan dealers — broke in to laughter.

Across town at that rather moment, broker Alan Haig, president of Haig Partners, was addressing an audience of retail executives at the Automotive News Retail Forum. He, too, painted Nissan as a troublesome brand.

“Nissan is one where there is a division of opinion,” Haig said. “You’re either in their camp, and they adore you, and you can easily make a lot of cash on Nissan stores. Or they’re not happy along with you, or you’re not happy along with them, and you have actually to get hold of out due to the fact that life is not going to be pleasant for you.”

Sharing the stage along with Haig was Mark Johnson, president of the dealer brokerage MD Johnson Inc., that carried on the criticism.

“We have actually a lot of Nissan dealers that ask me: “Are there any Nissan dealerships for sale?'” Johnson said. “I say, “Yeah — all of them.'”

His audience likewise laughed.

“You throw a dart and there’s a Nissan dealer along with a termination letter,” Johnson added.

Last year, 287,190 Nissan Rogues were sold in the U.S. vs. 124,543 in 2011.

Tasting victory

Upon hearing of the comments later, Jose Munoz, Nissan Motor Co.’s hard-charging North American chairman, was not amused.

“I’d enjoy to understand why these people are saying this,” Munoz complained. “We’re making good progress enhancing the brand, and points are going rather well.”

He isn’t kidding. Led by Munoz, Nissan is hitting all its U.S. objectives, achieving results that competitors and naysayers doubted were feasible merely a few years ago.

Through March, Nissan North America posted a 9.8 percent U.S. market share, including Infiniti sales. 5 years ago, as quickly as its U.S. share stood at 8.2 percent, below that of Hyundai-Kia Automotive, Nissan Motor Co. CEO Carlos Ghosn declared that his company would certainly achieve a 10 percent U.S. market share by March 31, 2017. Competitors and observers rolled their eyes dismissively. Yet now, Nissan is within a whisker of Ghosn’s objective line, 12 months early.

And Brand-new products are now reaching the U.S. market in volumes that must raise the automaker’s performance here further. Chief among them: the redesigned full-size Titan pickup. Nissan has actually been a lot more or much less absent from the big-truck segment in recent years, along with much less compared to a 1 percent share.

The Titan has actually been redesigned on a larger chassis and fitted along with a Brand-new V-8 diesel engine option. A Brand-new pared-down version comes later this year that must put the Titan on the consideration list of large-volume pickup fleet buyers for the initial time.

Nissan North America likewise vowed in 2011 to overtake Honda to become the No. 2 import automaker in the U.S. market. That objective seemed particularly implausible. Not only is Honda a powerhouse in compact crossovers along with its popular CR-V, Yet the Civic remains hugely popular. Nissan’s ambition likewise seemed to gloss over the strength of American Honda Motor Co.’s premium Acura brand, which routinely overshadows Nissan’s Infiniti marque.

But for the initial three months of this year, Nissan North America outsold American Honda, including Acura.

That month-by-month race is subject to modification over the course of a year, as sales surge for one brand or the other. And Nissan has actually been ahead early in the year prior to devoid of topping Honda for the entire year. Yet Honda’s longstanding lead over Nissan is gradually shrinking as Nissan’s models gain popularity.

Last year, 287,190 Nissan Rogue cross-overs were sold — up from 124,543 sales in 2011, the year that Nissan put Honda in its crosshairs. And this year, Nissan opened a third production line to bring a lot more Rogues in to the U.S.

Nissan likewise has actually succeeded in restoring the lagging Sentra compact vehicle to its past glories.

Despite such successes, some Nissan dealers tell Automotive News that they are unhappy along with the brand. It is not the product line, they emphasize — it is the manufacturer’s way of growing its business in the U.S.

A former Nissan dealer in the Southeast said he received “at least two” letters from Nissan threatening termination over the past three years. The dealer, that spoke on the condition of anonymity, holds 15 franchises. His group is profitable, he said, and he has actually not had issues along with others manufacturers.

He had owned his Nissan store for a lot more compared to a decade, regularly selling a lot more compared to 1,000 Brand-new vehicles a year. Then Nissan added two points to his market area. That diluted his sales, he claimed, bringing them down to regarding 600 Brand-new vehicles a year. Yet Nissan did not lower the sales target it called for your man to hit to earn factory incentives, he said.

The former Nissan dealer told Automotive News that he decided he had had “enough brain damage” from Nissan, and last year he sold the store.

Manufacturers regularly go through rough patches along with their dealer bodies. Over the years, dealers from Chevrolet to Toyota have actually expressed dissatisfaction along with factory practices through official protests and lawsuits.

“as quickly as manufacturers have actually aggressively gone towards a particular goal, which is exactly what Nissan is doing now, they tend to go harder on some dealers,” said Joe Roesner, president of Fontana Group Inc., an auto retailing consulting firm in Tucson, Ariz.

Roesner said there are “a good number” of Nissan dealers “making enough noise where as quickly as you go to the National Car Dealers Association convention or talk to staff at the state dealer associations, Nissan is the one everyone is talking regarding and complaining about. It’s a general undertone.”

Soaring share
Nissan North America’s U.S. sales and market share have actually risen.

2016*400,2049.8%
20151,484,9188.5%
20141,386,8958.4%
20131,248,4208.0%
20121,141,6567.9%
20111,042,5348.2%
2010908,5707.8%
2009770,1037.4%
2008951,3507.2%
20071,068,2376.6%
20061,019,2496.2%
   
*Through March
Source: Automotive News Data Center

Munoz: No laughing matter

Subsidies for some

In recent months several dealers likewise began complaining regarding exactly what they described as Nissan North America’s efforts to raise its market presence in picked cities by aiding one local dealer. Two Cleveland market dealers filed fulfill in U.S. District Court for Northern Ohio in February alleging that Nissan is providing support adding up to millions of dollars to a competing dealership there. The fulfill claims that the factory support quantities to a discriminatory incentive program that violates both U.S. and Ohio law.

A similar dealer protest is challenging a factory subsidy to an Infiniti store in Coral Gables, Fla. According to that complaint prior to the Florida Division of Administrative Hearings, Nissan North America agreed to offer an Infiniti store owner up to $4.4 million over seven years to insight cover genuine estate, construction and others costs. Section of the cash is tied to his achieving performance targets.

In February, Girard Nissan in Groton, Conn., filed a lawsuit in U.S. District Court for Connecticut, alleging that Nissan is violating state franchise laws by not having reasonable incentive programs for all dealers. That lawsuit seeks payment of lost incentives and a right-sizing of territory resulting in a lot more achievable objectives for the dealership.

Such lawsuits and the murmuring in public regarding them put a chill on buyer interest, says buy-sell adviser Haig.

“Any litigation smells bad,” Haig said. “It makes buyers ask themselves, “Why would certainly I even pursue a Nissan franchise?'”

Judy Wheeler, that became vice president for Nissan Division U.S. sales in January, says such assertions are merely wrong.

“as quickly as we hear dealers saying their franchise isn’t worth as much, that is absolutely incorrect,” Wheeler said. “Our franchise values have actually gotten better. Franchise values are up fairly a bit,” she said, declining to prove to the percentage increase.

Wheeler acknowledges that there is a negative buzz in the air regarding Nissan in some circles, Yet she questions the motives behind that buzz. She says Nissan management was expecting to hear regarding it from dealers throughout the brand’s franchise make meeting at this year’s NADA convention. Yet there was not a single negative question.

“We have actually over 1,300 dealerships, Nissan and Infiniti,” Wheeler said in an interview along with Automotive News. “Will certainly we ever have the ability to preserve them all 100 percent satisfied? Absolutely not. It’s merely math. You can easily never preserve everybody for good happy.

“If we can easily have actually 95 percent of our dealers along with us, then that’s fantastic.”

But she says the automaker is making every effort to keep on growing in the U.S. market while working along with dealers to address complaints and resolve problems.

In March and April, Munoz met along with dealers about the country to announce adjustments to the Nissan Sales Growth Program that were requested by dealers. The program is Nissan’s ongoing sales incentive campaign, intended to spur dealers to bigger volumes and reward them along with money as quickly as they succeed.

Dealers at various brands have actually loudly decried such stair-step incentive programs. In the past two years, Nissan has actually modified its program three times in response to dealer physique suggestions.

Munoz, along along with his top executives, travels monthly to meet along with the company’s national dealer advisory board members, asking retailers exactly how Nissan can easily make points job much better for them.

Munoz has actually assigned executives to various committees to execute dealer ideas on troubles ranging from staffing the company’s Nissan Motors Acceptance Corp. finance arm to be open for business on weekends and at night to changing the method vehicles are distributed regionally.

But no one at Nissan North America — no matter exactly what its dealers may ask — is backing away from the corporation’s mission from Ghosn. Nissan intends to preserve growing market share in the United States, as well as in Canada and Mexico.

And that translates to a lot more sales, which translates to harder job at the retail level.

Wheeler said: “We’re driving a lot of change, and not everybody likes change. We’re asking dealers to do a lot more and get hold of on board along with us.

“as quickly as you ask them to change, not all of them are going to move at the pace that the company is moving — especially dealers that have actually been rather comfortable, riding along, and making a nice living.

“We’re saying, “We hope to take it to the next level. We would certainly enjoy a bigger piece of the pie.’ And that means that they all have to step up as well. Some of them are thinking, “I don’t know if I hope to do that.'”

Wheeler acknowledges that this Brand-new pace of business is going to create some Nissan dealers to lose out. Yet she likewise says the overall mood of Nissan dealers is overwhelmingly positive. She cites the case of a retailer in Nissan’s Western sales region that had put his store up for sale, Yet that now is backing away from an interested buyer due to the fact that he believes Nissan is increasing in value as a franchise.

“The dealers that are along with us Will certainly keep on to get hold of stronger,” Wheeler said. “For the ones that say this merely isn’t for them — here’s an opportunity to sell your dealership and get hold of a terrific fee for it. The market for Nissan dealerships is rather sturdy right now.”

But that grow-or-go message is not assisting Nissan endear itself to retailers, Roesner adds, nor making dealers comfortable along with additional investment.

Asks Roesner: “would certainly you enjoy that?”