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Exclusive: Nissan not aiming for top five

Ready to roll: Nissan Australia managing director and CEO Richard Emery says the company is now stronger than ever and ready for future challenges.

Nissan Australia in a much better position now than in 2014, says Emery

Nissan logo19 Apr 2016

NISSAN Australia is now in “much better shape” than it was two years ago and is now building for its future, but there are no plans to be a top-five volume player, according to managing director and CEO Richard Emery.

As GoAuto revealed exclusively in 2013, Nissan’s previous management found itself with an over-supply of vehicles that were being pushed through dealerships in a bid to improve the Japanese brand’s sales volume in Australia.

Since then, the company, under Mr Emery, has worked to clear excess stock and implement a wide-ranging new business strategy that does not include overly ambitious sales targets.

In an interview with GoAuto, Mr Emery said that while 2014 was about consolidation and “clearing up some of those things hanging around our neck”, the 2015 Japanese fiscal year (which ended on March 31) was about making the business “robust”.

“2015 was about building a foundation for the business to be robust, to be disciplined and to allow for us to take the advantage of opportunities,” he said.

“Those opportunities for us will be tied to our lifecycle plan and in some cases that will give us opportunities in 2017, maybe in 2018. We will be in the best shape to take advantage of those because of what we have done over last couple of years.

“Are they going to bear fruit in 2016? I don’t think so. I think volume expectations this year are going to be pretty in line with where we finished 2015.”

Mr Emery said the expectation that Nissan will finish this year with a similar tally to last year was related to some models underperforming, while supply constraints on a couple of unidentified models would also have an impact.

Nissan Australia ended the 2015 calendar year with 66,062 sales, just 37 units or 0.1 per cent ahead of its 2014 result. So far this year it has hit 17,363 sales, which is 1.7 per cent behind the same period in 2015.

Last year’s sales were impacted by the staggered launch of the new NP300 Navara, along with the discontinuation of the slow-selling Almera light sedan (in late 2014) and the Murano SUV, which is not being built in right-hand drive for its third generation.

Mr Emery said Nissan was far stronger now than it was in 2014 and that building a strong and successful car company was about more than sales volume.

 center imageLeft: Nissan Australia managing director Richard Emery.

“In terms of preparing ourselves for future opportunities, we are absolutely in much better shape than we were two years ago. If I was to look back and say what was my job in the first two years, it was to get the business in an environment that it can take advantage of opportunities in the future,” he said.

“That’s not necessarily about volume. One of the philosophical things I have taken with this organisation is that there are a whole range of things that make a car business successful. Volume is just one of them.” “Pure volume growth and beating Hyundai and Mazda is not one of the KPIs.”

Mr Emery said the company is looking at how much volume it gets out of the fleet and rental markets in a bid to improve the long-term prospects of the business and the Nissan brand.

“It is about making sure the business is in the best shape it can be across measures. Sometimes that means walking away from volume. We have walked away from volume in last two years. We are planning to walk away from volume opportunities in 2016 that are available to us simply because we don’t think it is good for the business in the long term,” he said.

“Could I sell more rental cars? Yeah I could. Could I be more aggressive in some fleet business? Yeah I could be, but it is probably not what the business needs long term.”

While some car-makers in Australia, such as Ford, have reversed their policies of selling large numbers of vehicles to rental car companies, Mr Emery said Nissan has global contracts with some rental operators, adding that there “is always going to be an element of that”.

“I could do 8000 rent-a-cars or I could do 2000. It doesn’t actually cost us much money in terms of profit and our dealer’s contribution. I just sell 6000 less cars,” he said.

“That was a big thing for someone like me, who is competitive, to walk away from what VFACTS (sales data) looks like. We look but we don’t care. If across the range of 10 KPIs we have got nine ticks and then over here, does the VFACTS look good? It’s way down the list of priorities.”

Mr Emery said the car-maker was “absolutely” chasing more fleet business but that he would do it on his terms.

“A couple of dealers have said ‘you’re anti-fleet’. I am not anti-fleet. It’s part of the consumer mix in Australia,” he said.

“If you want to be a top-10 car company in terms of pure volume in Australia, you are going to have to play in that space. I just want to make sure when we do play in that space, it is sensible, it is sustainable, and it also contributes to the other things that make this business tick.”

In terms of volume, Mr Emery said Nissan was not seeking to return to the top-five best-selling automotive brands in Australia – last year it was seventh behind Ford – and added that the car-maker’s popular line-up of SUVs puts it in good stead for the immediate future.

“We are strong in some things and not so strong in other segments.

Unfortunately, if you are not strong in SUVs then you are going to struggle to grow over the next five years in Australia. We happen to be okay in SUVs in terms of lifecycle, our product line-up and Nissan’s focus on that segment globally. That puts us in good shape.

“I don’t think it’s any surprise that we are weaker in passenger cars than we are in SUVs. That’s probably not going to do a lot of damage in the next four or five years as passenger is under pressure. If that turned around in next three or four years, then our business plan will be somewhat different,” he said.

“You make the most of what you’ve got to deal with. If you build a business plan around selling 200,000 cars, we don’t have the segmentation line-up to do that in the Australian market so our attitude is (do) the best we can with what we have got, sustainably.

“Other people might say, ‘Nissan should be selling 80,000’. I’d love to be selling 80,000 but I am not going to try and do that in an unsustainable fashion.”

Mr Emery said the relationship with Nissan’s 200-stong dealer network had improved dramatically since he started, but acknowledged it was difficult to satisfy everyone.

“Our working relationship with the network is better, by far. But are they all happy? Of course not. That is a consequence of the fact that there are always going to be business circumstances that affects dealers differently,” he said.

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