Nissan Versa Sales Plunge Because Nissan Wants to Help Dealers Sell Certified Pre-Owned Vehicles

America’s historic subcompact car segment leader, the Nissan Versa, suffered a sharp 22-percent U.S. sales decline in the first half of 2017.

In fact, total Versa sales plunged 45 percent in June 2017. The Versa remained America’s top-selling subcompact nameplate, and by a wide margin. Even in June, when Versa sales plunged by more than 6,500 units, Nissan still owned nearly a quarter of America’s subcompact market.

Nevertheless, it’s odd to see the segment leader, a car that was selling better than ever at this time last year, suddenly dropping like a stone, declining even more rapidly than the segment as a whole.

But after years of using the Nissan Versa as a tool for turning used car buyers into new car buyers, Nissan USA is scaling back factory support for the Versa in lieu of assisting Nissan dealers with their certified pre-owned efforts.

The basic 2017 Nissan Versa S sedan is priced from $12,875. According to Kelley Blue Book, the average transaction price in June in the subcompact category was $16,401, almost exactly the price of the basic Versa Note, the $16,365 S Plus.

As years of hefty leasing comes back to bite automakers with excessive pre-owned lease return inventory, causing an eventual drag on new vehicle sales volume, a strong certified pre-owned program is essential for dealers to capitalize on the industry’s increased used car competition.

Selling those pre-owned Altimas and Sentras, however, isn’t easy if a hugely affordable new car is sitting in the other corner of the lot. For the customer, a similarly priced new car, with its roomy rear seat and efficient engine and built-in warranty, is an enticing proposition when the prices are extremely low. For the dealer, however, that old car may not maintain the same level of profit as the new car.

Evidently, Versa sales were increasingly elevated to record levels in part by Nissan support: incentives to customers and/or bonuses to dealers, marketing dollars, a uniquely low MSRP. Nissan’s vice president for U.S. sales said the Versa’s severe drop comes after an “intentional move” on Nissan’s part to “back away from the Versa segment,” Automotive News reports.

With less emphasis on one of the least expensive cars in America, however, Nissan can install greater support for comparably priced or even somewhat more expensive used cars. As a result, dealers will be more attracted to Nissan’s CPO program, which typically enables dealers to charge more for a used car. Millennials, for instance, are apparently willing to spend $3,800 more on a certified pre-owned car than an equivalent, non-certified example.

Nissan won’t soon give up on the Versa from a new car perspective, of course. Nearly three out of every 10 subcompact buyers in America chooses a Versa, roughly the total produced by its two closest competitors combined. But if the Versa is Nissan’s tool for igniting interest in the brand among younger first-time buyers, an Autotrader study suggests CPO vehicles are powerful tools for doing the same. 69 percent of CPO buyers are likely to return to the dealer for their next automobile purchase.

In 2016, Toyota was the CPO giant, earning 20 percent market share with more than 500,000 CPO sales. Market-wide, certified pre-owned sales reached record highs in each of the last five years and are likely to top 2016’s record in 2017.

[Images: Nissan]

Timothy Cain is a contributing analyst at The Truth About Cars and Autofocus.ca and the founder and former editor of GoodCarBadCar.net. Follow on Twitter @timcaincars.