Nissan sticks to its guns on lower fleet sales

Nissan's strategy of pulling back from rental fleet sales is being put to the test as retail sales decline among its dealers, along with much of the rest of the U.S. industry.

Faced with tumbling sales, a diminished brand image and frustrated dealers, Nissan is on a course to pursue profit margin over market share. That means breaking its addiction to fleet sales, which has dinged residual values and hurt dealer profitability.

Nissan is holding firm to its plan, despite the temptation to offset falling sales. Nissan Division U.S. sales plummeted 33 percent last year, its largest annual percentage decline. But its U.S. commercial and rental fleet sales were 68 percent lower in 2020 than in 2019, according to a vehicle registration estimate compiled by TrueCar. Last year, Nissan's percentage of fleet to overall sales was nearly half of what it was in 2019.

"We have reduced substantially the amount of fleet that we're doing and it's going to continue to be our plan," Judy Wheeler, Nissan Division vice president of sales and regional operations in the U.S., told Automotive News.

Nissan's efforts to wean itself off fleet is being aided by the coronavirus pandemic. With business travel on hold nationally for much of last year, demand for vehicles from rental companies plummeted. But steering away from rental fleet sales is part of a broader shift at Nissan toward a pull sales strategy rather than a push.

"We're not pushing volume or targets," Wheeler said. "When you have less vehicles coming back through the fleet accounts, it means our supply of used vehicles has lessened. It drives up residual values and starts to drive up the demand within the dealerships themselves for the products."

Fleet sales offer short-term benefits with long-term consequences, noted Nick Woolard, TrueCar director of OEM and industry analytics. "Fleet sales help smooth out demand and keep factories running throughout the year," he said. But an over-reliance on fleet can result, over time, in bloated used-car inventories that diminish resale values and turn away consumers, Woolard said.

The 2020 Sentra compact sedan showcased Nissan's new fleet-lite diet.

Following its launch last January, the redesigned Sentra was not offered to rental fleets for about 10 months. That strategy paid off by lifting the model's residual value 18 percentage points over the 2019 Sentra and 4 percentage points over the Toyota Corolla.

Nissan expects to apply the fleet-lite strategy to future model launches. The automaker will introduce three new or redesigned models this year, including an electric crossover.

"As we launch new vehicles into the market the plan is to put as little fleet as possible in," Wheeler said. But Nissan isn't quite ready to go cold turkey with fleet sales.

"You do want some awareness out there for your product as customers use rental vehicles when they go on vacation, or when they're traveling for business," she said.