MT Interview: Jim Wright, Nissan, CEO

Nissan car sales have grown for six straight years although managing director Jim Wright sees 2015 as being a year of consolidation with rising dealer profitability

Nissan started 2015 strongly on the back of six successive years of growth, culminating in a new record in 2014 when car sales grew 17% to 138,338 units, a remarkable surge for a volume carmaker. With these numbers Nissan has a 5.2% market share and is the fifth biggest seller in the UK; a long way ahead of Peugeot, its nearest mainstream rival. The brand clearly benefitted from the sales boost provided by the new generation Qashqai, the car that invented the crossover market and continues to dominate it. It would have sold even more if production in Sunderland had not been disrupted for 10 days in September following a tooling issue. It also re-entered the C-segment with the new Pulsar.

The brand’s strength in car sales helped offset declines in its commercial vehicle business where sub 3.5 tonne van registrations slipped -3.3%.

How would you characterise Nissan’s sales performance in 2014?
“We look at it from a financial year so in 2013-2014 we had our third record year in a row with over 165,000 cars and LCVs so we were up 17%. We had a really successful year. Over a 12-month period, if you include minor changes, we launched 12 cars so there was a lot of activity for our dealers and ourselves. In terms of how we see 2014-2015 we anticipate growing our share marginally. The story for us is that we’ve launched all these cars and we now need to stabilise and pause before we start again. We’re also looking at the full year effect of the Pulsar.

“Last year we had supply disruption problems which put a lot of strain on the network and I can only apologise on behalf of the company for that because in September we had supply constraints with the Qashqai and Juke, because of the production hiatus which happened in the run up to the September plate-change and September itself. Even though we grew our volume, it was not without its challenges. From a network perspective we’ve done a great job and the fact that we still managed to grow volumes is a real credit to them. For us 2015 is all about consolidation and a marginal improvement in share.”

How is dealer profitability performing?
“We had a really good close to the year with a very strong December but it’s still not where we need it to be. We’re at 1% RoS at the moment. Dealer turnover is climbing quite substantially and our target is to get RoS up to 1.5-1.6% in the next fiscal year. We’re taking actions not only by looking at dealer P&L on a line by line basis but also in the way that we are structuring margins. Our end point is to get to 2% RoS by the end of our 2016 fiscal year in 2017.

“However, dealer turnover is climbing substantially with of all of this volume feeding through. Average transaction prices have climbed and our aftersales retention has lifted significantly so we’re starting to see the car parc effect. We’re above market average for customer retention and I think that will continue because the 0-10 year parc is starting to climb a little and the 0-5 year parc is also starting to increase substantially and this is all starting to filter through into network aftersales activity. The dealers in the top quartile are growing quite substantially but what we need is for that middle chunk to go up. We also have some new starts in the network and some cold and lukewarm territories and that has an impact on the overall dealer composite, so we should see its effect in 2015.”

How are service plans and PCPs performing?
“We’ve been doing service plans for about four years as part of our new car offer and are now doing it as part of our used car offer. Sometimes service plans are even offered free to the used car customer because it’s all part of a strategy to increase our renewal rate. Our service plan penetration rate is somewhere around 80% of retail sales. Four years ago our PCP penetration wasn’t strong and it changed with the Qashqai as it brought a lot of new people into the franchise and that continued with the Juke. I think we’ll see the same with X-trail. Our PCP penetration across finance is over 60%.”

How important is small fleet business to the brand and your dealers?

“While we have been reasonably successful at LCVs in SMEs we have been less successful with cars. However, with our product line-up being as wide and deep as it is today, better than ever before in our history, we have an opportunity which is untapped. In February we had a number of dealer meetings where we explained to them precisely what we want to do in terms of realigning this programme. We’ll reduce slightly the number of business centres we operate and we’re asking dealers to invest in terms of sales prospecting and service offer.

“For some of those dealers, depending on the territory, we’re going to ask them for an even higher level of service offer in terms of opening hours and commitment to parts supply. This will answer our desire to have a more comprehensive service offering for blue chip and SME customers to enable us to increase our commitment to them and increase our penetration of that segment of the market.”

This interview can be found in the April 2015 edition of Motor Trader.