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Nissan takes stock of oversupply

Myth buster: Nissan Australia managing director and CEO Richard Emery said the company has moved on from overstocking issues that plagued it last year.

Hard decisions made as Nissan attempts to curb stock and re-engage buyers

3 Apr 2014

NISSAN Australia’s newly appointed CEO and managing director, Richard Emery, has revealed that the “difficult decisions” about turning around falling sales and addressing rising stock levels had already been implemented, but that the results would not be obvious for a while yet.

Speaking to GoAuto at the launch of the new third-generation X-Trail medium SUV in Melbourne this week, the former general manager of sales at Mercedes-Benz Australia/Pacific said the first tough steps had already been undertaken by the previous interim CEO – MD of Nissan Financial Services Australia, Peter Jones, who stepped in to replace former MD William Peffer after his sudden return to the United States last September.

While Mr Emery said the company is still working diligently to clear thousands of unsold vehicles still in storage lots, all incoming stock is now already subjected to a formula that now meets Nissan’s requirements rather than making VFACTS headlines.

“There’s still some work to be done, and in terms of tidying up some of our stock and supply issues to get the balance right, but we’re well on the way to achieving that,” he said.

“It’s no surprise to anybody that we have some models that we’re overstocked on.

“That happens in the car business the world over with all brands from time to time. Sometimes you get the supply line wrong or get a short-term sales drop and you get that mix wrong.

“That was certainly the case late last year, and whether we hung on too long to make that adjustment is in the past.

“But we have made those adjustments and those adjustments happened in three ways – slow down the supply of cars arriving of a particular model to get the balance right, sell more of what you’ve got, or do a combination of both – which the latter is what we’ve been working on.

“And I can see a clear point in time where we clean up the past to give us an opportunity to come back to the market place with the right product with the right volumes to meet the needs of that market place.

“And that’s about being realistic about every single product line – so what is a sensible but still challenging number for Micra? Or Pulsar? Or X-Trail? Or Qashqai? Or Navara? “Once you add all those numbers up you deliver a number for the whole year to VFACTS and people can make their own judgements on that.

“But if we can sit back and say ‘we thought Micra was worth X amount of cars and that’s what we’re delivering’, whether it is first or third or fourth in segment to some extent is for other people to worry about.” With Nissan’s volumes down by almost 40 per cent in the first three months of this year (6014 versus 8408 sales compared to the same time in 2013), Mr Emery said there is a time-lag perception that needs to be taken into account.

“First thing, that’s looking at (three) months in isolation and I think that’s dangerous,” he said.

“If you ask me if I’m happy with where we are with volume, like most car company executives I would tell you that of course I would be happy with more.

“But in the context of where we’ve been over the last 12 months, where we are at with our stock position, our sales rate and our model line-up, it’s a much improved position from where it was four or five months ago. The middle of last year was really hard work.

“Peter Jones and his team have taken the sort of steps that I would be taking.

They’ve done some of the hard work for me in terms of preparing the ground for us to put a new crop in. So from that perspective, we’re in good shape.

“But does it mean on paper that, and in VFACTS (Nissan volumes), don’t look so rosy? Yes, but that’s not for us to worry about, because from what I know about the business and the decisions that we have already made, we’re where we want to be.”

Mr Emery said that he would not follow some of his predecessors in making volume targets public.

What was said in the past is in the past. What I can say is that with my discussions with Japan in terms of their expectations is that we need to maximise our result for what we think is possible for each of the model lines without having rose-tinted glasses on, and that if we maximise these opportunities then it would be a big number.

“But whether that is 10 per cent or eight per cent or whatever, I haven’t been told by Japan or by any of the process that we want 10 per cent, or want to be market leader. That’s never been broached with me.

“It’s more about fixing some of the concerns the network has about business practices, and getting on with maximising opportunities.”

Even though he has just began officially in the MD role, Mr Emery said he had been scrutinising the situation closely from afar, with a clear idea of how Nissan should leverage its core strengths better.

“Yes, it’s only been day two,” he said. “But my decision process coming into this position meant that I’ve been thinking about the business and observing from the outside over the last few months.

“And I’ve got some views that I now need to test in reality now that I am in the business.

“The brand has a lot going for it in terms of the things that it stands for.

And from my perspective I need to drag those out more. I think the brand has become a little bit vanilla … so it’s got some core personality characteristics that need to be accentuated.

“We need to pinpoint what Nissan is and improve how we communicate to our consumers when we specify our products and how we take a car to market, to ensure that those personality traits that have made Nissan a major brand in Australia come forward overtly.

“So if I ask a person in the street what Nissan stands for, they’ll be able to instantly pinpoint two or three things. I don’t want them to say ‘Patrol, Navara and Pulsar’, I want them to say ‘innovation and sporting’ or whatever the words we determine are the things that hold true.”

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