Nissan's New Strategy: Build Brand Value, Not Fleet Sales or Incentives

Matt Posky
by Matt Posky
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nissan s new strategy build brand value not fleet sales or incentives

Nissan has long-standing tradition in North America of being a bargain brand. While the automaker fields plenty of affordable options with a base MSRP undercutting that of its rivals, it has also leaned on aggressive incentivizing and heavy fleet sales. This helped Nissan chase volume in the U.S., but CEO Hiroto Saikawa is no longer convinced it’s a winning strategy.

He’s tasking Denis Le Vot, Nissan’s new North American boss, to improve profitability and brand value after the company’s operating profit dipped 50 percent in the region in the last quarter of 2017.

It’s a tall order for Le Vot, who has only had a little over one month to settle into being the regional chairman for the brand, and Saikawa is only giving him another two to figure out how to pull it off. However, he’s hinting at a strategy that eases off dealers, offers fewer market incentives, and ditches a reliance on fleet sales.

“We have to first improve the brand value and profitability,” Saikawa said in an interview with Automotive News last week. “Hopefully, we will be able to reach a very solid point in two years. This is the first mission for the new chairman.”

It’s a lot for Le Vot to take on, especially considering North America’s automotive market has been cooling off for over a year now. However, luxury brands haven’t felt the pinch quite as strongly. In fact, Infiniti’s U.S. sales grew from 138,293 units in 2016 to 153,415 in 2017 — a new annual record for the brand. January was a different story, however, as Nissan’s monthly volume rose 10 percent while Infiniti sales fell by 8.

Still, Nissan was hardly crippled by low volume in 2017 — the company set a global sales record last year. But Saikawa claims the automaker bolstered factory output to feed a higher demand that never came. Combine that with hefty low-margin fleet sales and dealerships annoyed by having to play into the big incentives game, and the home office isn’t happy. All things considered, things could be far worse. The brand isn’t facing a crisis so much as it’s hunting for profits and trying to avoid a disaster that could materialize later on.

“The team has been so used to more production and piling up of the supply side, then the wholesale. And with the [total industry volume] very good, it was relatively easier to sell,” Saikawa said of Nissan’s seven-year run of annual gains. “But, when the U.S. team is so used to that, they were a bit late to start action in adjusting.”

That leaves Le Vot to decide how much of the baby to throw out with the bathwater. While it’s unquestionable he’ll need to fix the brand’s bloated inventories (it had a 319,900-unit surplus at the start of the month — a number it hopes to drop to 100,000 by the end of March), the jury’s out on how far he’ll go in tweaking Nissan’s Western strategy. It’s a strategy that has worked well enough for the last decade.

Unlike his predecessor, Saikawa says he isn’t interested in market share. He’s only concerned with increasing residual value. Nissan has a 65-day supply of vehicles and an average incentive spend of $4,500 per vehicle — about $500 higher than the industry average. Both of these are elements Saikawa believes Le Vot will have to change as soon as possible.

Matt Posky
Matt Posky

Consumer advocate tracking industry trends, regulation, and the bitter-sweet nature of modern automotive tech. Research focused and gut driven.

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  • Speedlaw Speedlaw on Feb 12, 2018

    The guy tailgating me is in an Altima...every time. The SUV being driven stupidly ahead of me is a Rogue. The only Nissan I ever drove that shouldn't have been crushed yesterday is a GT-R...but that doesn't count as it is a microscopic production-JDM build with no relation to Nissan usa. Really, nothing there...nothing. CVT ? Nope.

    • See 1 previous
    • TMA1 TMA1 on Feb 13, 2018

      I give wider berths to Altimas than any other car on the road. I expect Camrys to be doing the speed limit no matter what, Corollas to be doing 5 under the speed limit, and Altimas to go careening off a wall or across multiple lanes of traffic with no warning at all.

  • SSJeep SSJeep on Feb 13, 2018

    Sadly, Nissan will have a long way to go in order to rebuild "brand value", and I am not entirely sure they can pull it off given the emergence of Hyundai as a major competitor. First and foremost, Nissan needs to stop building mediocre vehicles. The Rogue is among the least interesting CUVs on the market (although the seats are comfortable), the Pathfinder is a rolling joke, and the Altima is a rental car lot / BHPH queen. The only exciting models in the Nissan lineup are the Z and the GT-R. The Leaf is an odd man out and is a good overall electric car (which I also like). The new Armada isn't half bad, but it is outclassed by the GM duo on just about every metric. Second, Nissan needs to dump the CVT - they should have years ago. Several years worth of Nissan models with CVT transmission are now stuck with a ticking time bomb that is generally too expensive to replace (and it WILL self destruct), leaving many Nissans in junkyards and many former Nissan owners absolutely livid. Third, Nissan needs to wrangle in their dealer network. Nissan dealers in my experience are second only to Kia dealers on the bad experience scale. Marketing to a more upmarket clientele means better customer service both before and after the sale. Last, Nissan needs to add some halo cars to their fleet. They have them in Japan. Bring a version of the Skyline here or make a Skyline performance badge (similar to AMG or SRT) on all of their models. Offer real transmissions, more horsepower, and an engaging driving experience. Nissan doesnt need to have an NSX, but they need some sort of performance upgrade to be competitive in the US.

  • Carsofchaos Bike lanes are in use what maybe 10 to 12 hours a day? The other periods of the day they aren't in use whatsoever. A bike can carry one person and a vehicle can carry multiple people. It's very simple math to figure out that a bike lane in no way shape or form will handle more people than cars will.The bigger issue is double parked delivery vehicles. They are often double parked and taking up lanes because there are cars parked on the curb. You combine that with a bike lane and pedestrians Crossing wherever they feel like it and it's a recipe for disaster. I think if we could just go back to two lanes of traffic things would flow much better. I started coming to the city in 2003 before a lot of these bike lanes were implemented and the traffic is definitely much worse now than it was back then. Sadly at this point I don't really think there is a solution but I can guarantee that congestion pricing will not fix this problem.
  • Charles When I lived in Los Angeles I saw a 9-5 a few times and instanly admired the sweeping low slug aerodynamic jet tech influenced lines and all that beautiful glass. The car was very different from what I expected from a Saab even though the 900 Turbo was nice. A casual lady friend had a Saab Sonnet, never drove or rode in it but nonetheless chilled my enthusiasm and I eventually forgot about Saabs. In the following years I have had seven Mercedes's, three or four Jaguars even two Daimlers both the 250 V-8 and the massive and powerful Majestic Major. Daily drivers of a brand new 300ZX 2+2 and Lincolns, plus a few diesel trucks. Having moved to my big farm in central New York, trucks and SUV's are the standard, even though I have a Mercedes S500 in one of my barns. Due to circumstances with my Ford Explorer and needing a second driver I found the 2006 9-5 locally. Very little surface rust, none undercarriage, original owner, garage kept, wife driver and all the original literature and a ton of paid receipts and history. The car just turned 200,000 miles and I love it. Feels new like I'm back in my Nissan 300ZX with a lot more European class and ready power with the awesome turbo. So fun to drive, the smooth power and torque is incredible! Great price paid to justify going through the car and giving her everything she needs, i.e., new tires, battery, all shocks, struts, control arms, timing chain and rust removable to come, plus more. The problem now is I want to restore it and likely put it in my concrete barn and only drive in good weather. As to the writer, Alex Dykes, I take great exception calling the 9-5 Saab "ugly," finding myself looking back at her beauty and uniqueness. Moreover, I get new looks from others not quite recognizing, like the days out west with my more expensive European cars. There are Saabs eclipsing 300K rourinely and one at a million miles and I believe one car with 500K on the original engine. So clearly, this is a keeper, in love already with my SportCombi. I want to be in that elite club.
  • Marky S. I own the same C.C. XSE Hybrid AWD as in this article, but in Barcelona Red with the black roof. I love my car for its size, packaging, and the fact that it offers both AWD and Hybrid technology together. Visibility is impressive, as is its small turning circle. I consider the C.C. more of a "station wagon" by proportion, rather than an “SUV.” It is fun to drive, with zippy response and perky pick-up. It is a pleasant car to drive and ride in. It is not trying to be a “Butch Off-Roader”, or a cosseting “Luxury Cruiser.” Those are not its goals or purpose. The Corolla Cross XSE Hybrid AWD is a wonderful All-Purpose Car (O.K. – “SUV” if you must hear me say it!) with a combination of all the features it has at a reasonable price.
  • Ernesto Perez There's a line in the movie Armageddon where Bruce Willis says " is this the best idea NASA came up with?". Don't quote me. I'm asking is this the best idea NY came up with? What's next? Charging pedestrians to walk in certain parts of the city? Every year the price for everything gets more expensive and most of the services we pay for gets worse. Obviously more money is not the solution. What we need are better ideas, strategies and inventions. You want to charge drivers in the city - then put tolls on the free bridges like the Brooklyn, Manhattan and Williamsburg bridges. There's always a better way or product. It's just the idiots on top think they know best.
  • Carsofchaos The bike lanes aren't even close to carrying "more than the car lanes replaced". You clearly don't drive in Midtown Manhattan on a daily like I do.