The gigantic automobile manufacturer Nissan revealed that their operating profit dropped to 45%. One of the major reasons for this fall is said to be the troubles with the U.S which includes failed deliveries to the dealers. Nissan’s U.S operations have set unreasonable sales goals and sales bonuses, which resulted in an increased sale of fleets.
The CEO admitted that Nissan was supposed to bring the fleet sales to 15% from 17% by 2022. However, bulk sale of the fleet will now result in less resale value, and it will affect the retail customers. Nissan dealers in the U.S complain that the parent company has not fulfilled the promises made about a turnaround plan. Many dealers were not convinced because the sales bonus plan is still on, and it will be rewarded only if the targets are achieved.
The sales bonus program or programs like it can force the dealers to increase the profit margins so that the target can be achieved. If not, they will see the rivals taking away the bonus money. In the last three years, profit has reduced by 50%. If the parent company sets high targets, it will be depressing for the dealer, which results in the sale of used cars. Nissan’s head of North America, Jose Valls said that in the next three years they will revive the line-up.
Relying On The U.S Market
Major automobile companies like Honda and Toyota rely on discounts in the U.S markets to sell their vehicle. These discounts can be used to increase the resale values, says Cox Automotive. On Tuesday Nissan CEO Saikawa said that people prefer buying vehicles according to discount and are not giving preference to the strength of the vehicle. If Nissan pulls out from fleet sales, it will affect Nissan’s U.S manufacturing operations as it builds around 640000 vehicles per year.
New Plans In The Loop Hole
Jose Valls announced that Nissan does not plan to lay off any more workers. Earlier, this year around 400 workers lost their job. Chris Reed Head Of Nissan’s R&D said,
Nissan’s new goal will be launching new models and revamping the old ones in two years.
Nissan plans to introduce new versions of Rogue, Frontier pickup truck and Pathfinder SUVs.
Now on, Nissan’s steps will be closely watched said Pete Delongchamps because the discounts and high inventory still stands as a problem.