New UK managing director Gary Frigo is now expecting a more settled period and claims the issues over franchise standards and the new corporate identity, which saw two dealers hand in their notice earlier this year, “are behind us”.
Frigo, appointed MD last month after Bill Bosley was promoted to vice president at Nissan North America, has also laid out his sales growth objectives and says that after a number of poor years, dealers can expect 2007 to usher in the start of strong period of growth for the rest of the decade.
Sales this year are down by 22% largely to the run-out of Almera, Primera and Tino and the absence of diesel versions (it expects to end the year on 93,000, compared to 102,000 in 2005). “That’s three big sellers on wind down,” says Frigo. “That was part of the plan for our sales to fall in this way. We want a more profitable sales mix.”
Despite the decline in new car sales, dealer profits are up year-on-year by 10%. However, network costs are up 15% due to rising cost of property and energy services, and investment in the new visual identity.
To the end of June, retailers averaged 1.4% return on sales with the best exceeding 3%. Frigo says that if the network is above 1% by the end of the year, “it will be an improvement on last year”. He adds that 18% of the 230-strong network is loss making.
“But dealers are selling a richer mix of cars and the average transaction price is much higher,” says Frigo. Five years ago, the entry level Micra was the model’s top seller; now it’s the higher equipped SE. Dealers are also selling on average £1,000 of accessories for Navara.
“We are also selling more retail and our sales here are only down 1.5% in a market down 6%,” he adds. “2007 and beyond, the franchise has significant growth potential. We plan to grow average profit per dealer and return on sales.”
Nissan is placing a lot of emphasis on the launch of the C-segment P32L, due early next year, which it hopes will help raise brand profile and conquest up to 80% of the sales volume.
“The launch needs to be perfect,” says Frigo. “This car can act as a halo for the whole brand. We want more people to desire a Nissan.”
After a number of stagnant years, Frigo is confident that sales will again exceed 100,000 in 2007, which will also help dealers to raise profit.
“There has never been a better time to be a Nissan dealer in the UK. Dealers that have invested in our new corporate identity are getting a good return now,” he says.