Nissan ready to concede on vans

About a decade after launching a bold assault on the Detroit 3-controlled commercial van business in the U.S., Nissan is retreating.

Nissan plans to discontinue production of its NV cargo and passenger vans in the U.S., sources familiar with the plans told Automotive News. The automaker assembles the large vans at its Canton, Miss., plant. It builds NV200 small vans in Cuernavaca, Mexico.

"We don't want to go more in the business of vans in the U.S.," said a source familiar with the decision. "We will exit."

Nissan spokesman Brian Brockman declined to provide details on the company's long-term plans for the commercial van market.

"Nissan is considering a number of opportunities to streamline the product portfolio and drive efficiencies within our manufacturing operations," Brockman said of Nissan's overall business. "We will provide updates as available."

An exit from the van business will have ramifications for many — but not all — of Nissan's retailers. Only about a fourth of the brand's more than 1,070 U.S. dealers made the necessary store investments to enter the commercial vehicle business in 2011, installing heavy-duty lifts capable of raising 30,000 pounds of loaded vans, extending business hours to accommodate contractor needs and hiring a sales staff dedicated to fleet issues.

Those who invested did so under the assumption that Nissan would support the products indefinitely, said Tyler Slade, operating partner at Tim Dahle Nissan Southtowne in suburban Salt Lake City.

"Dealers now have serious concerns about their investments in commercial vehicles," Slade said.

Tim Dahle Nissan, one of the brand's largest sellers of NV passenger vans, sold about 200 NV cargo and passenger vans last year. The business represented about 15 percent of the dealership's annual sales.

Nissan's retrenchment from the segment underscores the ongoing unwinding of former Nissan Chairman Carlos Ghosn's expansive, market-share driven strategy.

Ghosn aggressively spread Nissan's products across segments and geographies in pursuit of global volume. Nissan enjoys a strong presence in Japan's commercial vehicle market, and a decade ago, Ghosn vowed that the company would extend that prowess to the U.S.

But Nissan's efforts stretched the company's financial and human capital thin. It is now undertaking a corporate makeover that prioritizes profit over volume. The automaker plans to trim its nameplates by 20 percent, shrinking its global lineup to fewer than 55 models from 69 today. It will focus on a smaller number of more profitable core models.

The coronavirus pandemic is likely to accelerate the lineup change, said IHS Markit analyst Stephanie Brinley.

"The COVID-19 situation has disrupted things so drastically," Brinley said. "There's going to be a lot of marginal programs that have to be rethought."

When Nissan launched the NV van in the U.S. nearly a decade ago, the segment was an unchallenged Detroit fortress.

Ford and GM alone controlled about 97 percent of the large van segment, and small commercial vans were an uncertain new concept in an era of rising fuel prices.

Nissan hoped to stir things up. Its van offered a fresh alternative to Detroit's boxy and aged offerings. The NV was billed as a more comfortable option, with no-brainer design enhancements such as adjustable seats; a taller ceiling for easier access to cargo; and pre-drilled holes in the vehicle body so painters, carpenters and electricians could add interior racks and shelving without causing unsightly rust.

The NV's beefy chassis initially proved popular with plumbers and carpet cleaners, for whom hauling power was paramount.

But Nissan was unable to loosen the American brands' market grip in any significant volume. The modest share Nissan was able to capture flatlined over the past five years.

Last year, Ford held nearly 50 percent of the commercial segment, while GM had nearly 22 percent, according to the Automotive News Data Center. Nissan, with an 8 percent share, has languished near the bottom. It sold 38,790 NV and NV200 vans in the U.S. in 2019, about 16 percent of the 240,529 van volume that Ford did.

Nissan might also be looking at a new development in the segment's competition. GM is reportedly developing an electric van aimed at business users. The van — code-named BV1 — is due to start production in late 2021, Reuters reported last week.

It wasn't just an issue of entrenched U.S. brand loyalty that stymied Nissan. Part of the Japanese automaker's challenge was its product plan.

Nissan struggles to win over fleet customers because it lacks the breadth of light-truck variants and configurations that the Detroit 3 offer, Slade conceded of the competition.

"Chevrolet and Ford can be everything to everybody," he said.

His point: Vans and pickups work together to attract sales in the commercial fleet market. Nissan's Titan full-size pickup is a meager competitor to the immensely popular Ford F-150 and Chevrolet Silverado.

"When we went to some of these fleet companies, it didn't make sense for them to have trucks from Ford and vans from Nissan," Slade said. "We really only had success with small companies, like caterers and florists."

Nissan's decision to build the large NV vans on a modified Titan pickup platform also compromised the vehicle in two areas key for urban cargo-haulers. The big van's extended pickup-style nose made the NV less flexible in parking and on deliveries in congested city settings than the cab-forward designs of competitors, said Sam Fiorani, vice president at AutoForecast Solutions.

That design also compromised cargo capacity, he said.

"A third of the vehicle is dedicated to the engine and passenger compartment instead of cargo," Fiorani said. "The van takes up more real estate for the same amount of cargo space."

Nissan understands the commercial van market and has a "competent product," analyst Brinley said.

"I'm just not sure they have a selling proposition that is significantly better than the competition," she added.

It's also not clear that Nissan's exit from the business will be permanent.

The automaker's new business strategy, laid out publicly late last month in Japan, calls for more global cooperation with its alliance partner Renault. And Renault has a number of successful van products in its portfolio.

Nissan has already marketed an adapted front-wheel-drive Renault Traffic van in Europe under the nameplate NV300.

Putting a Renault van in the U.S. would take some effort and investment in the way of homologation. But retailer Slade welcomed the idea of offering a Renault alternative instead of walking away from the business here.

"Nissan management has said it is committed to the Renault-Nissan-Mitsubishi alliance," he said. "Here's a great way to prove that we are committed to the alliance."