A Nissan dealer wish list for the next CEO

Nissan's dealers, weary from years of marketing program swings and aggressive factory sales objectives, have a message for the Japanese automaker's next CEO: Be consistent.

"We can't keep experimenting," said Ray Brandt, CEO of Ray Brandt Auto Group in suburban New Orleans. "One day you've got a $5,000 rebate on a car, and the next day you don't get any rebate. We lose confidence with our customers. They think we're cheating 'em."

Asked to give advice to a CEO who hasn't been hired yet, retailers from around the country asked for consistency more than anything else.

The dealer body has been grappling with changing business strategies and a revolving door of factory leadership since the ouster of Nissan Motor Co.'s hard-charging chairman, Carlos Ghosn, after Japanese authorities arrested him on allegations of financial improprieties last year. Two weeks ago, his successor as CEO, Hiroto Saikawa, also exited the company after attempting to reverse many of the Ghosn strategies that pushed Nissan for much of this decade.

Whoever the new CEO, expected to be named by the end of October, will be, he or she will need to fix things for retailers in the all-important U.S. market, several dealers say.

"Dealers are betting their future that Nissan gets it right because we don't have a lot of leeway right now," said Tyler Slade, co-owner of Tim Dahle Nissan Southtowne in South Jordan, Utah.

They offered these suggestions to the next CEO:

Dealer relations have been strained by years of factory pressure to move metal. Somehow, they need to be soothed.

"If they don't fix this, Nissan will lose retailers to other OEMs," Slade warned.

About 30 percent of Nissan's U.S. dealerships are losing money, with an additional 10 percent merely breaking even, according to a source familiar with that internal Nissan data. Low store profits often lead to reductions in store advertising and the loss of key employees.

Scott Smith, president of Smith Automotive Group in Atlanta and chairman of the Nissan National Dealer Advisory Board, said the management must work on lifting Nissan from its value brand reputation.

The brand has been too focused on low-margin, "deal-of-the-day pricing and an any-credit-goes customer," Smith said. "When you're only a transaction price brand, you appeal to a narrow market."

Nissan's dealer sales incentive bonus program has evolved over the years, but it continues to chafe many dealers. The program rewards them with cash for hitting ambitious monthly, quarterly or year-end sales goals, but complexities and frustrations have caused some retailers to walk away from the brand.

Dealers must hit up to eight performance goals to unlock the maximum bonus. "We need less complexity," Slade said. "Sell the car, get the money. That would drive dealer profitability."

At a dealer meeting in late August, Nissan said it would boost advertising and marketing spending by 32 percent in September. Some dealers complain the automaker has been too frugal in its spending on product launches. That, they say, leads to more showroom incentives.

"Don't launch and leave," Smith advised. "Nissan doesn't spend the money upfront; they spend on the back side to get rid of the product."

Slade agreed, offering as an example the launch of the new-generation Altima sedan last year. He felt the factory should have spent more money to bulk up the advertising for the redesigned car's unique selling point — its all-wheel drive.

"Toyota, Honda, Hyundai do not have an all-wheel-drive midsize car; we do," Slade said. "How did we not emphasize the Altima's all-wheel-drive capability better?"

Nissan has one of the oldest lineups in the U.S. industry. Toyota typically updates its products every four to four and a half years, compared with Nissan's average six-year cycle, dealers say. Shorter product cycles would help Nissan respond faster to changing consumer tastes while drawing customers into its dealerships with greater frequency.

Some Nissan dealers expressed a need for a more manageable portfolio with fewer options and trim levels. Nissan has 18 nameplates, each of which has three or four trim packages. Too many option packages and trim levels make it complicated and expensive for retailers to stock their lots.

Dealers said they hope Nissan's new global chief will not address the company's U.S. sales decline by returning to the pre-Saikawa strategy. Profitability now matters more than sales numbers, said the dealer board chairman.

"To do a 180 with the strategy would be suicide," Smith said. "Dealers are already in pain."