Fixing the mix in Nissan's products

The Dualis is the model in Nissan's local product range that best exemplifies how the company perceives itself — and how it wants the public to perceive it too.

A run-away success in Europe, where it's sold as the Qashqai, the Dualis has done more than its share in boosting Nissan's sales there. In fact, the company is close to snatching the position of number one-selling Japanese brand in the market, says the MD of Nissan Australia, Dan Thompson — and the heavy lifting Dualis is doing in Europe is happening on a smaller scale here also.

Sales of the Dualis rose from 2587 in the full year for 2008 to 6592 last year. This year, for the first six months alone it has sold 4481. Pro rata, that's close to 9000 sales by the end of 2011. Naturally, Thompson would like to see Nissan's 'core models' in Australia all follow the lead of the Dualis.

There are signs that Micra will follow suit — once over its current shortage of supply — and Thompson anticipates that the car that succeeds the current Tiida can emulate the success of the Dualis too. Profit is the principal reason, of course, in synergy with brand management.

"We knew brand was certainly something that was holding us back," said Thompson in conversation with motoring.com.au last week. "It wasn't negative in any way, shape or form. There's no negative perception in the market about Nissan; it's just either a non-existent perception — or that strength in commercial and offroad and four-wheel drives. Obviously our growth needs to come through passenger; through Dualis and through Micra — and eventually through Tiida replacement."

Thompson further explained that it can take five or 10 years to change a company's image, and Nissan Australia has been quietly beavering away behind the scenes for the past three years so far. But...

"We've been doing it without really the full complement of passenger cars, so that's why you've seen a lot with us, with Dualis — because we believe Dualis is a great representation of where we want to take the Nissan brand."

According to Thompson, Micra and the Tiida replacement will join Dualis as the principal spearheads of Nissan's improving brand image.

"Micra is obviously something we're investing in — and then the big one will be the Tiida replacement, obviously."
  
Nissan's improving fortunes in Australia provide the local arm a head start embarking on the new global business plan, Nissan Power88. Right around the world, the new business strategy effectively compels the company to increase global market share to eight per cent by 2016.

That's double its share back in the 1999 financial year, Thompson says. Doubling global market share in around 17 years may not sound that ambitious — but it is. It is because the other 64 brands currently fighting it out for profitability in Australia will not just let Nissan take market share away from them.

Nissan has to be a bit aggressive, but it also has to be clever. It can't expect to take sales away easily from its rivals in market segments where Nissan is already competing, so it must also enter new market segments, as well as broadening the appeal of its existing or new products.

Infiniti launching in Australia adds incremental sales volumes, as does the introduction of Nissan-branded vans to the local market. But probably the majority of sales growth will come from sales conquests, using existing models or their successors. For that to happen, the product must be good, the pricing must be keen and the marketing must on the money.

If the product is already well regarded — or soon will be — an easy way to increase sales volume for that particular model is by expanding the range with new variants. It is, in fact, the very reason Toyota has given for declining sales of the Corolla in recent times — fewer variants than in earlier generations of the iconic small car.

Should Nissan boost the number of variants in each of its core model ranges, larger sales volumes will naturally follow. That explains why the K13 Micra range comprises six variants, versus just one for the superseded K12 range. It's why the Dualis is now available in the +2 version as well (pictured), with diesel variants to arrive in due course, plus 4x2 and diesel variants of the X-TRAIL already selling alongside the petrol 4x4 models. Lastly, it's why the Tiida replacement will offer buyers a much more comprehensive menu from which to choose when it arrives here.

With Micra, the Tiida replacement (Pulsar?), X-TRAIL and Dualis, Nissan will be focused on the three market segments that show the greatest potential for consistent volume growth in the future.

But these are high-volume, affordable cars. It's quite a different approach Nissan adopts for its 'non-core' models. If it's a 370Z or a GT-R, it will come equipped in just the one level, perhaps with two transmissions and coupe/convertible styles — and that's about it.

Even though the Maxima is a little more mainstream, it won't be sold in an endlessly diverse range either — especially since the Maxima is a large car, based on VFACTS segmentation, and Thompson believes that "the medium segment is [the] one worth pursuing", which is why the company has the 2.5-litre model as well as the larger-displacement variants — to pit the Maxima against mid-size cars with the smaller V6. In every other instance of 'non-core' models, Thompson explains, ranges have contracted.

"We've eliminated petrol Pathfinders, petrol Patrols," Thompson continues. "We've eliminated mid-grades on almost all our non-core models. Actually, I think Maxima is the only example where we haven't reduced a grade. In every other instance we've gone from either three grades to two or two grades to one; and where we can we've simplified powertrain ..."

If Nissan can expand sales just through greater diversity of model variants, wouldn't that also apply to the non-core models? Wouldn't profitability and throughput be enhanced considerably with low-spec 370Z variants selling below the Luxury Car Tax, if that were possible?

Against profit and revenue the company must also factor in the cost of goods sold. What's the point of bringing in a bare-bones version of the Z if sales staff sell only a handful in a typical year? Economies of scale apply to volume-selling budget-priced cars — where you can justify holding the stock, knowing individual examples should sell within a month or so at the worst.

"Our philosophy has always been around efficiency in the portfolio," says Thompson, "so what you'll see from us from today, let's say, to the end of this plan, which is six years down the track, is getting more out of the models that we have."

And the logic of a diverse product range works when there's plenty of sales volume — as well as being manageable at a dealer level and making perfect sense to the retail customer.

Thompson says: "It's difficult for a full-line brand like Nissan to expect its dealers to stock 13 cars, which all have three grades and around each grade, could be a two-wheel drive, a four-wheel drive, a petrol, a diesel — and eventually a hybrid. It's just impossible to efficiently stock, efficiently support from a sales floor or sales person perspective...

"It's daunting and overwhelming to expect our sales people to be able to understand and explain to customers that level of complexity.

"All of us, I think, are guilty of getting caught up in getting too deep into spec, feature — the hard-core automotive bits that drive us. Customers or consumers? They're in a completely different space.  Depending on the segment, they just want reliable transport and they want something that makes their life easier — something that they're proud to sit in and drive every day...

"We definitely overdo it as an industry, trying to offer way too much to customers…"

Read the latest news and reviews on your mobile, iPhone or PDA at carsales' mobile site...