By on October 12, 2020

After enduring a series of rough years resulting in some unsettling financial reports, Nissan is doing its utmost to turn things around. Following its first annual loss in 11 years, the company announced a plan that would include cutting 20 percent of its global lineup to make way for newer models, eliminating unnecessary production capacity, and cutting corners (and jobs) just about everywhere in order to save $2.8 billion off of fixed costs. This is also being done to make way for a leaner, meaner Nissan, and make room for newer vehicles it believes will be essential to remain competitive.

It’s also hoping to spruce up dealerships to make them more desirable locales for customers ready to do their business. That includes an increased number of factory audits moving into 2021  partly as a way to make up for the limited number that were conducted this year thanks to the pandemic and partly as a way to make sure nobody is doing anything financially untoward. But there are some concerns among owners that Nissan may end up bullying shops unnecessarily.

In a normal year, automakers typically audit around 3 percent of its dealer network. But a retailer who was briefed by the automaker recently told Automotive News Nissan would be checking around 10 percent of its dealerships next year. While a company spokesman has confirmed that the automaker would be increasing the amount of audits in 2021, he declined to give a specific number  noting that Nissan’s validity checks on warranty claims were already below the industry average and should be remedied.

There are claims that it has been ramping up factory audits already, however. Nissan’s National Dealer Advisory Board has received complaints from members stating that they’ve been issued demands from the manufacturer to repay amounts of up to $140,000. Many have also said the audits are not triggered by suspicious sales or warranty claim activity and appear predatory in nature.

From Automotive News:

The clawback unfolds as parent company Nissan Motor Co. of Yokohama, Japan, is in financial turmoil. The company has forecast an operating loss of $4.5 billion for the fiscal year, ending March 31, 2021. Nissan executives are scrambling to find ways to tighten up company finances.

“Nissan has lost more money than they’ve ever lost in 20 years,” said one dealer who said he was recently charged back about $60,000 in warranty claims. “It’s an easy way for them to get cash.”

Some of the dealers, who spoke with Automotive News on condition that they not be identified, said the new audits are tending toward nitpicking, calling for repayment for infractions such as incomplete paperwork.

“They certainly don’t seem to be accommodating with a reasonable man’s approach to doing a warranty audit at a dealership,” said one retailer, who is facing a $40,000 chargeback. “Typically, warranty audits are looking for fraud. They’re not looking for ‘Did you time-punch everything to perfection?’?”

To its credit, Nissan has recently upgraded dealer education protocols to help employees avoid minor infractions or major safety violations that could result in a fine. But dealers continue to suggest recent audits aren’t based on concerning warranty claims, safety concerns, or evidence of fraud  with some claiming the factory is abusing the system to find excuses to fine their shop. Nissan said a lot of checks are made at random but that it will also look into any retailer with suspect paperwork or a string of customer complaints.

The truth of the matter probably lies in the automaker having a real desire to make sure dealerships are in tip-top shape, with the ability to pad its revenue via audits being an added bonus. This has not stopped shop owners from accusing Nissan of taking advantage, however, and plenty intend on using the law to combat fines. Dealer attorney Richard Sox, managing partner at Bass Sox Mercer of Tallahassee, FL, told AN such practices can become revenue centers for automakers in their times of need.

“It’s a tremendous transfer of wealth from dealers to the manufacturer,” he said. “Auditors have admitted their instructions are to make sure they pay for themselves in regards to their findings. So they have to dig things up.”

[Image: FotograFFF/Shutterstock]

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6 Comments on “Nissan to Keep Closer Tabs on Dealerships in 2021, Retailers Annoyed...”

  • avatar
    SCE to AUX

    There will probably be a few dealers who decide it isn’t worth the trouble. Others will have to sell more tire nitrogen and lighted door sills to pay the mothership.

    On the other hand, Nissan could improve its messaging on EVs, for instance. Their dealers are clueless. A Rogue is a much easier sale than a Leaf.

    This is where Tesla has a real advantage – dealer shenanigans are a non-issue, prices are fixed, and the EV story is clear.

  • avatar

    So, how’s that “the world would collapse without car dealers in the middle” idea working for them now?

    The dealers wanted the advantages; they also get the disadvantages.

    Maybe if enough of them decide it’s not worth the hassle, Nissan can lead the way in opening up direct factory sales.

  • avatar

    “…noting that Nissan’s validity checks on warranty claims were already below the industry average and should be remedied.”

    So Nissan thinks that maybe dealers are performing repairs and charging the repairs to Nissan, when maybe they’re the results of owners’ negligence, like engine replacements in cars where the owners never changed the oil? Yeah, that could negatively affect their bottom line.

  • avatar

    I never considered Nissan but assumed that dealers will honor warranty. Now I has doubts about it. Who will make repairs under warranty if dealers are disincentivized to do that?

  • avatar
    Jeff S

    Just another reason to not buy a Nissan besides Jatco transmissions and declining quality.

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