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Nissan Sells Dealers On New Spiff Strategy : News

Nissan's U.S. chief is convinced that a dealer sales incentive program launched nationally on April 1 will make his retailers bigger and richer, and propel Nissan toward its goal of a 10 percent U.S. market share.

"We believe this is going to be a key driver for us to be able to grow more profitably," says Jose Munoz, chairman of Nissan's North American operations.

Munoz, a former nuclear engineer and Toyota sales executive from Spain, has spent most of the past year personally appealing to U.S. dealers -- some of them rankled by Nissan stair-step sales programs in the past -- to embrace the new plan.

"All dealers in one way or another were complaining about the programs we had in place," he says.

Munoz says the timing is right for the new sales push. Nissan dealer profits are increasing and retailers are buoyed by higher sales and a stream of new models.

"They thought there would be a better way to grow," he says, referring to initial dealer reaction to the proposed plan. "They thought the objectives would be impossible. But the initial reaction we got was quite positive. The dealers are saying this is reasonable."

On April 1, the start of Nissan's fiscal year, Nissan gave its 1,100 dealers a 12-month sales goal -- but left it up to them to plan how to achieve it, how to budget their marketing dollars and how to order vehicles in advance to hit their targets by March 31, 2015.

Manufacturer stair-step programs have irritated dealers of various brands. The campaigns typically ask dealers to hit higher store volume targets on short notice with the promise of cash bonuses. Dealers receive nothing if they fail to hit their targets.

"One of the key elements for them was planning," he tells Automotive News, re-creating the voice of the dealer complaints he heard about past campaigns. "This month, only these models count, and these other models don't. Next month you pay for this, but you don't pay for the others. You don't give me visibility on whether I want to buy models for one month or two months."

To galvanize the dealer network behind the plan, Munoz and his U.S. management team spent the past nine months working with retailers to hammer out details and visiting dealers around the country to sell it.

"I think everybody ought to be able to make this work," says Dan Banister, co-owner of Nissan of Chesapeake in Chesapeake, Va. "We've had a lot of complaining at dealer meetings in the past about various things we didn't like. But Jose Munoz and his team have convinced me that they really want to work everything out and get us all moving forward. I'm convinced that they're going to do it."

Banister and his business partner, Patrick Dibre, own six Nissan stores in Virginia, New York, New Jersey and California, including one they acquired recently in Richmond, Va.

"Our Chesapeake store sales in March were up 58 percent from a year ago," Banister says. "We think Nissan can grow even bigger. It was tough in the past to get these stair-step programs to work out because you wouldn't get enough time to plan for them or order the cars you needed. The new system gives you the plan for the entire year."

Nissan's U.S. dealer profits also are improving, Munoz says. In February, the most recent figures Munoz can cite, dealer profits rose more than 40 percent, year over year.

For the 11 months through February, dealer profits were up 25 percent, he says. And the percentage of all dealers operating profitably has increased 5 percentage points.

But not all dealers are happy, Munoz says. Some dealers are miffed that Munoz has canceled Nissan's dealer reward trips until the sales goals are reached.

"Some of the dealers aren't happy about that one," Banister says. "But my attitude is that, if all these plans work like we expect, we'll all be making so much money we can pay for our own trips."

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