By on February 12, 2018

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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.

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32 Comments on “Nissan’s New Strategy: Build Brand Value, Not Fleet Sales or Incentives...”


  • avatar
    Lightspeed

    Just bought my first Nissan, a 2003 Maxima. I’m quite happy with it: great 3.5 V6 engine, very comfy seats, amazing steering-wheel warmer, good handling and elegant styling. Then I look at the new Nissans and see clunky styling, cheap interiors, CVT transmissions. They’ve got a ways to go to build the brand again. The last time I thought of Nissan even having a brand character, was when they were all about performance with the legendary “Ken and Barbie” ad, “Mr. K” and “dogs love trucks!” Right now they are just the car that’s not a Toyota.

    • 0 avatar
      gtem

      Nice buy! I really liked my time with my beater ’00 Maxima, as rusty and dilapidated as it was. Very fun car to rip around in, even with the auto.

    • 0 avatar
      dal20402

      Well done. There is a lot of great driving history in the Maxima name, just waiting to be exploited by Nissan again. I still have fond memories of my high-school girlfriend’s stickshift ’85 version.

    • 0 avatar
      slavuta

      I drove it. It is nice. Only it feels too slow for all the advertised horses and they have constant check engine light problem. But I also like the current model. And if not for CVT it would be a great car.

      • 0 avatar
        gtem

        CELs were mostly stupid things like ignition coil resistance values out of spec (engine still ran fine). The 5.5gen VQ35 cars are properly fast, even with an auto. I daresay one of them would leave your 6 for dead away from a light or especially in a highway pull. There was a guy who dropped a VQ35 into a lighter gen4 shell, slapped a high stall converter into the stock 4spd auto(!), 75 shot of nitrous and some hot cams, that was a reliable and consistent 11 second car, amazingly the drivetrain/powertrain held up for multiple seasons of bracket racing.

  • avatar
    Sub-600

    Cutting incentives and saying you’re a premium brand doesn’t automatically make it so, these are still Nissans we’re talking about here. Maybe an ad blitz featuring dogs would help.

    • 0 avatar
      brn

      It worked for Acura. For a while anyway.

      • 0 avatar
        thornmark

        Best Luxury Brand: Acura
        Acura enters 2018 with its third consecutive brand win in the 5-Year Cost to Own Awards. What’s its secret? The answer lies in Acura’s ability to make vehicles that are both luxurious and a great value. Pertaining to the latter, Acura owns the win-win formula of making cars that are priced lower than those of other luxury automakers, yet hold their value better in the long run. Dollar for dollar, Acuras boast more features compared to rivals, all while benefiting from innovations like those derived from its NSX supercar. Throw in a reputation for building cars that are efficient and boast rock-solid reliability, and it’s easy to see why Honda’s luxury division can add yet another crown to its collection of 5-Year Cost to Own Awards.
        https://www.kbb.com/new-cars/5-year-cost-to-own-awards/best-brand/

    • 0 avatar
      thornmark

      Nissans are crap, bottom drawer. Generalization to be sure, but Nissan = Mediocre Motors.

      Too bad Nissan wasn’t left to die. Renault saved it to the detriment of much better brands like Mazda that suffer from discount brand Nissan merchandizing.

  • avatar
    slavuta

    Who is going to buy these without discounts? If they lower the price first… Is there anything exciting in Nissan lineup besides GTR, Maxima and Juke Nismo? all of which low or fairly low volume items

  • avatar
    dividebytube

    Nissan has lost the thread a long time ago. I mean I used to be a Nissan fanatic – at least back in the late 80s – and would have pitted their cars against anything that Honda or Toyora made.

    But when I bought a ’97 Altima, it felt cheaply made compared to the ’87 Stanza. The former had higher road noise, thinner seats, and a lot more plastic on plastic squeaking, and this on a car with only 29k mikes. The 2.4L DOHC was also rather agrarian and nowhere close to a Honda 4-pot in smoothness.

    The ’94 hardbody truck was good though. Very “trucky” and underpowered, but no 4-cyl in this segment was a power house.

  • avatar
    VW4motion

    Funny, Toyota seems to be headed in the other direction. Hard to find a rental car in Utah, Wyoming , or Idaho that is not a Toyota.

  • avatar
    aquaticko

    Nissan seems to have lost it, post-mid-2000’s. They had a brief period of good with the late 90’s, and at least the early 2000’s were interesting, French-ified things, like the orange, manual Maxima with the coin slot in the roof, the sub-6 second 0-60 manual V6 Altima, and the enormous, practical, head-turning Quest. Same thing with Infiniti–being so ahead-of-the-curve with the original FX, the excellent second generation M, and the wonderful G35.

    Now they really seem to have nothing going for them over any competitors, save perhaps for the almost appealingly-blunt cynicism towards the car-buying public.

    • 0 avatar
      gtem

      The introduction of the “frenchified” “sporty” interiors in the early/mid 2000s was the nadir of Nissan quality IMO. Futuristic, “interesting” (to some) styling, but the quality was abysmal. The late 90s-early 2000s interiors were already lagging Toyota’s and Hondas, but atleast there was a semblance of classic Japanese ergonomics and plain but pleasant design and some soft touch vinyl. Then they dove right off a cliff IMO.

    • 0 avatar
      slavuta

      I drove rental Altima around 5years ago. My thought was – wow, Nissan made a Camry, only worse.

  • avatar
    gtem

    This seems like an appropriate place to write up my brief impressions of a rental Altima 2.5S last week (11k miles on the clock), used for just a few brief jaunts around San Diego, so just a bit of vigorous highway driving getting on and off ramps, but mostly hilly urban driving.

    I guess its an indicator of just how good we have it, as this is the oft-maligned entry in the midsize class. Very quiet*, very comfortable seats, a well sorted ride that deals with large road imperfections well. The only really egregious thing that stood out versus my “measuring stick” that is my wife’s 75k mile 2012 Camry SE 2.5 was how gruff the Altima’s 4 cylinder engine is. Maybe it is exacerbated by how darn quiet and muffled road and wind noise is, but the engine is really quite loud within the context of a very quiet everything else, and not just loud but quiet gravely/growly in an unpleasant way. I’d put road noise as being lower than my wife’s Camry on General Altimaxes (louder than stock tires fwiw). Interior seemed well put together with good materials and fit/finish, nothing stood out negatively, again I’d put it ahead of the circa 2012 Camry (pre-facelifted final K platform). A female acquaintance commented “wow nice rental car!” which left me a bit stupefied, and curious enough to follow up and ask what made her think that. “It’s black and looks clean.” Didn’t pay attention to fuel economy given the very short local driving. The only other thing that stood out as even somewhat memorable was the steering wheel was surprisingly thin, something I actually rather liked as it reminded me of driving an older car from the 90s.

    So there you have it folks, a very comfortable and quiet decent driving car with a somewhat gruff engine and thin steering wheel.

    • 0 avatar
      PrincipalDan

      There seems to be few reviews of Nissans that don’t mention the seats and in a positive way. If they turn out to be the best seats short of a Volvo, that will tempt me strongly. Although I know not all Toyota’s have bottom cushions as short as the ones on my Highlander.

      • 0 avatar
        gtem

        I didn’t spend enough time behind the wheel on a long highway haul to confirm, but thigh support seemed excellent, better than our Camry.

        • 0 avatar
          PrincipalDan

          The funny thing is I’m just a hair under 5’11”, god forbid you are someone who’s actually tall. Short cushion and I’ve got the seat at the end of it’s travel rearwards, still need a little more.

          But as I’ve said many times before – lumbar is more important to me.

          • 0 avatar
            30-mile fetch

            Toyota seats have been terrible for taller people for a long time, especially in the subcompact and compact segments. I’m about your height, though, and the outgoing Camry and current 4Runner have been comfortable for me. The seat bottom length is reasonable and they have firm support and bottom angle adjustments. The Sportwagen we used to own was even better in that regard, but those were unusual for a smaller car.

          • 0 avatar
            gtem

            I’m 5’11” as well. I’ve done long days in the Camry and it’s fine, but not superb. Believe it or not my 2012 Civic LX sedan was spectacular in terms of road trip comfort, all down to a pronounced lumbar support and a surprisingly wide and long seat cushion. Certain “americanized” elements of that un-loved generation of Civic were quite good (big seats and very strong A/C unlike just about every other Honda I’ve encountered)

    • 0 avatar
      30-mile fetch

      It’s the same engine as the 2012 Altima we had and it is a nasty unpleasant unit. Coupled with the older CVT it would scoot well, but it is an NvH nightmare anywhere on the tach, especially under load. The 2.5 in our 2016 Camry is about as old-tech but is a far nicer engine.

      I never bothered driving the 2013-current model; nearly every review strongly suggested it was a step back from the 2012 in driving dynamics and that is one of the areas in which the 2007-2012 stood out. The current model doesn’t seem to offer anything that cannot be found in a competitor. Combined that with the apparent failure rate of the Nissan CVT, and I’ll look anywhere else.

      • 0 avatar
        ernest

        +1- and we also own a ’16 Camry. Three observations on the Altima: 1. They get crazy gas mileage for the size car they are. 2. The seats really are a cut above and 3. After 30-35K daily rental miles, they drive like… well, like you’d expect a car built at a price point to drive after 35K daily rental miles. Contrasted with anything Toyota, that just doesn’t seem to show the wear and “loosen up” as the miles roll on. In all fairness, this isn’t just true of Nissans. Just about every make (including some higher end German brands) really show the wear as the miles roll on. Hyundai’s and KIA’s are the worst offenders in this area.

  • avatar
    slavuta

    $3500 cash on hood for Maxima now. Nice to get one for under $27K if you into it.

  • avatar

    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.

    • 0 avatar
      30-mile fetch

      I don’t normally subscribe to these types of characterizations, but I have indeed noticed Rogues and late model Altimas being driven by low-grade lunatics.

    • 0 avatar
      TMA1

      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.

  • avatar
    SSJeep

    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.

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