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Market Insight: Nissan prioritises brand over volume

Waiting game: After being overstocked with supply 18 months ago, Nissan Australia is now holding a waiting list for its popular Qashqai crossover.

Boosting brand image, not sales volume is the key to Nissan success: Emery

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7 Apr 2015

NISSAN Australia has ditched its overly ambitious sales targets set around 18 months ago and is now focusing on rebuilding its reputation as one of the top automotive brands in the country.

Nissan’s sales in Australia took a hit in 2014, with the company clearing an oversupply of stock dating back to mid-to-late 2013 that caused major issues between the company and its dealer network.

According to official VFACTS sales figures, the Japanese car-maker sold 66,025 vehicles in 2014 – a drop of 14 per cent over the previous year and about 14,000 units short of the 80,000 units the company was expecting at the midway point last year.

Speaking exclusively with GoAuto last week, Nissan Australia managing director and CEO Richard Emery said it was a “fair reflection” to suggest the sales slide was a result of the company’s strategy to clear the backlog of cars it had in dealers and parked on grass.

Mr Emery said he was concentrating on improving Nissan’s business strategies and does not obsess over monthly and yearly sales figures.

“We can all get bent out of shape about where we finish versus the competition on VFACTS numbers,” he said. “For us, that was a number that was kind of irrelevant because we were doing other things.

“Some people get excited about it when it comes out. I tend not to because we know the number we need to achieve with our network and ourselves and Japan, and irrespective of what that means on the rego number, the true test is internally rather than what is on the piece of paper and PR guys writing stories about being number one – you won’t get that from us as a rule.”

Up until the mid-2000s, Nissan was a regular fixture in the top-five best-selling automotive brands in Australia, but the rapid growth of Mazda and Hyundai has forced it, and Mitsubishi, to fight for sixth and seventh spot in the sales charts.

The last time Nissan graced the top five was in 2004 when it shifted 63,654 units to be fourth that year, ahead of Mitsubishi, Mazda and Hyundai but behind the local brands Toyota, Holden and Ford.

While sales numbers have grown since the start of last decade – Nissan hit a recent high of 79,747 in 2012 – the overall market has lifted by 16.5 per cent from 2004 (955,229) to 2014 (1,113,224).

In July last year, Mr Emery told GoAuto that he was gunning for a 10 per cent increase in sales, or 80,000 units by the end of 2014, but the company fell well short of the goal.

Last week, Mr Emery said he was less concerned about year-end totals or where Nissan ends up on the sales charts, and was more focused on lifting the brand image to where it was previously in the minds of Australian consumers.

“Nissan used to be one of the major players in the business,” he said. “For some reason, whether it be bad planning, product cycle, whatever else, over last three or four years, I feel like we have become a bit player, part of the ‘B-team’. Maybe at the top of the B-team but kind of in there with the Kias and Hondas and Suzukis and Mitsubishis.

“We want to declare that we deserve to be in that A-team. To me that will be the test. It won’t be whether its 50,000 cars or 70,000 cars, it will be whether we will be seen by the general public as a major player in the industry and on their consideration set.”

In terms of Nissan’s local growth plans, Mr Emery said the company was working to “make the most of our model line-up”, and is placing greater emphasis on how each model is performing in its respective segment against key rivals.

Mr Emery highlighted the failure and eventual axing of the Almera light sedan in Australia as an example of prioritising brand image over volume.

“I was prepared to walk away from 1500 to 2000 cars a year because I wasn’t interested in the volume. If I was interested in a growth number or 70,000 units I would have left that car in there,” he said.

“But Almera was a car that was not adding to our business in terms of profit, and in terms of brand, as it wasn’t seen as an innovative car or an exciting car.” The Almera launched in August 2012 under former Nissan Australia boss Bill Peffer, but Mr Emery announced in July last year that the model would be discontinued.

Mr Emery acknowledged that the Nissan brand image has been impacted in the past 18 months by the company’s decision to over-order cars, putting undue pressure on the 194-strong dealer network and leaving unsold cars on grass for long periods.

“I think the brand took a hit in the process,” he said. “I think that the face of Nissan for a couple of years had become about retail offers and sales programs. And I think some of our brand got lost in that. So certainly this year our intention is to … remind the public that we are a serious business.

“We are part of an alliance that is the fourth-biggest car company in the world. Between ourselves, Renault and Infiniti as an alliance here in Australia, we sell significant cars.”

Mr Emery highlighted positive elements of Nissan’s Australian operation, including the Dandenong-based casting plant that is producing components for electric vehicles in the Renault-Nissan Alliance world, its finance arm, the engineering team that tunes vehicles for Australian conditions, and the V8 Supercar team.

Sales have lifted in the first three months of 2015, off a somewhat low base, with 17,659 units shifted to the end of March, a 19.9 per cent boost over the same period last year.

Mr Emery said Nissan has the opposite problem to 18 months ago, with waiting lists on some model and variant lines, in particular the popular Qashqai crossover and larger X-Trail mid-size SUV.

Citing his previous role as Mercedes-Benz Australia/Pacific’s sales chief, Mr Emery said he was concerned about having a lengthy waiting list as customers will typically be happy to wait for a $150,000 Benz, but “they won’t wait for six months for a $30,000 Qashqai”.

“That’s the one thing I have had to readjust my brain to is that part of me that says gee it’s good to have a bit of demand above supply because it underpins our volume expectations, but it probably means we are losing business.

“And I am concerned we might be losing some opportunities on some model lines and that is always frustrating because we are a car company, we always want to be selling as many as we can.”

While selling cars is always the priority, Mr Emery said Nissan Australia has pulled back on some fleet business as it was not contributing anything to the brand, adding that the company has recently “walked away from some significant volume”.

“I am very happy to do fleet business but it needs to be on our terms and that balance got out of control. We were becoming too reliant on fleet and we found ourselves doing the business for volume alone and it wasn’t adding to our business in any core sense other than a number.”

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