Nissan bonus program still on drawing board

Nissan continues to reexamine its controversial sales bonus program, the automaker told retailers in its NADA make meeting last week. But changes are not necessarily coming.

The automaker has been back and forth over what to do with its dealer sales incentives over the past two years — whether to tone it down or press ahead.

"We continue to explore different options," Judy Wheeler, Nissan division vice president of sales and regional operations in the U.S., told Automotive News after the meeting. "At this time, we're staying the course. It doesn't mean that we won't change it in two, three months from now."

The sales-objective program financially rewards retailers for hitting specific sales volume targets. The program has long been a source of friction with dealers, who say unrealistic targets in the past fostered a culture of discounting, dented resale values, damaged brand reputation and hurt dealer profitability.

The practice caused some franchisees to walk away from Nissan rather than participate.

Dealer Volume Bonus "is one of those items that for every dealer that likes it, you have a dealer that doesn't like it," Wheeler said. "The intent of the program is to continue to get dealers to focus on retail sales."

Wheeler declined to elaborate on how the sales program might evolve. But she offered a hint.

"If we were to make a change, do you stay with a national program, or do you go to something that's more regionally focused?" Wheeler said. "That is probably the area that we keep coming back to the most."

But Nissan management currently finds itself under less pressure to overhaul the bonus program, which in recent months has been well received by dealers.

"In December, I would have said we need to definitely make changes and go in a different direction," Wheeler said.

"But in January, we had good dealer engagement on the program. We've had very good engagement for February, as well."

Sales programs are effective when dealers feel the objectives are realistic. It's about helping dealers understand "how we get to the number," Wheeler said. "We've really done a better job of training our field staff so that they can have a good conversation with dealers."

Nissan National Dealer Advisory Board Chairman Scott Smith said it is unrealistic to expect the sales objective program to disappear overnight.

The program is a necessary tool for automakers to drive market share — a lever they can pull to coax dealers to close an additional 10 or 15 deals a month.

"It's our pay plan," said Smith, president of Smith Automotive Group near Atlanta. "But, we are working on developing a transition plan that promotes good selling practices, attracts a more credit-worthy customer, and protects residual values."