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Nissan MD takes response to April margin changes 'on the chin'

Jim Wright, Nissan

Outgoing Nissan UK boss Jim Wright has admitted that imposing April margin changes on dealers “was not the right thing to do” and promised better communication with the network in future.

Wright takes over as Nissan’s vice-president of Nissan Europe East next month, but told AM that the last NFDA survey results achieved in his time as Nissan’s UK managing director were “unacceptable” and admitted mistakes had been made in the pursuit of greater customer satisfaction.

Nissan’s summer NFDA survey score fell from 6.9, compared to an industry average of 6.6 in the winter, to 5.7, against the more recent industry average of 6.7.

Speaking to AM at the Paris Motor Show, Wright said: “We made changes to the margin in April and, in hindsight, that wasn’t the right thing to do.

“We made those changes quite quickly and we should have communicated them more clearly and given the network more time to action any changes that needed to be made.

“It was well meant in that we weren’t cutting the absolute margin, but we were targeting different areas around customer service.”

Wright said that the changes were imposed around the same time that GPU was under most pressure – falling back from 1.3% to 1% - due to March’s high self-registration levels, adding: “You had a perfect storm there in that there were high levels of stock, pressure on margins and low profitability.”

“The NDA’s rationale is that they understand why we make these changes but they need more time to implement them and I take that on the chin.”

Wright said that Nissan had now “fixed” the situation, making the changes “more actionable” by its franchised partners, adding that plans for 2017 had already been communicated in order to give the network time to adapt.

A new dealer council has also been established with Eastern Western’s John Latrobe at its helm as chairman.

Efforts have been made to bring down the number of self-registrations in 2017, Wright said, as well as continuing to base profitability on CSI scores.

Later this year the brand will reinforce it customer-focus with the introduction of a transparent review service on the front pages of dealer websites.

Wright said: “There has been some kickback from our partners but search the internet for a dealer and while the first result might be their website, the second will probably feature a review from a customer. It’s already there, why not put it front and centre of our own sites to promote greater transparency and promote our great customer service levels?”

Nissan scored a lowly 2.7 score (against an average of 4.7) in the NFDA survey for the cost to dealers of registering and maintaining its demonstrators.

Wright said that the discontent of the dealers in this area was linked to the manufacturer’s demand for improved customer service.

He described demonstrators as “a bone of contention” within a network where aftersales capacity is being stretched by a growing car parc.

He said: “I think ourselves and our partners have underestimated the capital investment it takes to accommodate all that new volume of aftersales activity.

“There are pockets where customer service scores show that customers aren’t always getting courtesy cars. Dealers are investing to change that but courtesy cars and demonstrators aren’t always profitable, so it’s difficult.”

Wright said that Nissan was working to separate demonstrator and courtesy cars in an attempt to address the issue.

And as the current managing director heads to his new role – to be replaced by former Volkswagen UK director Alex Smith – he is impressed by the shape the Nissan network finds itself in.

He said: “The depth and the quality of the network is greatly improved.”

Eastern Western’s new flagship retail site in Edinburgh, Vertu’s investment in a new centre for Glasgow and Motorline’s facilities in Maidstone, Reading and Tunbridge Wells are all part of the move towards the Nissan Retail Concept corporate identity.

At the Paris Motor Show this week Nissan launched its new Micra hatchback.

Lower and wider than any of its predecessors and boasting new, semi-autonomous driving technology and the ability for customers to customise the look of their vehicle, the B-segment hatchback is targeting mainstream rivals like the Fiesta, Corsa and Polo head-on for the first time.

Wright said that “quality product” had made the move viable for partners, but said that a market share of 5.7% at the end of the current fiscal year would need to be supplement by a more efficient aftersales operation if dealers were to maintain margins in 2017.

He said: “We are asking dealers to hire more people and, if necessary, look more closely at their physical capacity. They can no longer rely on GPU.”

Reflecting on his departure from the UK managing directors’ role, Wright added: “It’s time for this role to benefit from someone with new ideas who can really re-energise the network and hopefully I had left things in a reasonable shape for Alex to be Able to do that.”

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