Old habits die hard. But it’s time — past time — for Nissan to quit stair-step incentives once and for all.
The Ghosn-era relic is not always a destructive tool, but after the damage the programs have done to the brand’s reputation and resale values, it’s one that needs to stay buried — for real this time — if the brand is to get out of its tailspin in the U.S., its second-biggest market.
Dealers, it seems, are finally being heard by senior executives after years of clashing with Ghosn and his team over his over-ambitious market share goals in the U.S. Some protested with their feet, leaving Nissan, while others remained but simply stopped chasing aggressive targets.
And stair-steps don’t hurt just new- and used-vehicle sales operations. As reported by Fixed Ops Journal, enticing subprime borrowers in order to meet volume targets can result in a population of customers who can’t afford to have even basic repairs done. With dealer profitability greatly reliant on service, that’s a significant problem.
We were disheartened to learn that while Nissan has dropped the stair-step structure for storewide payouts, it is continuing to use it on select models, adding unnecessary complexity and continuing to skew rewards toward bigger stores in bigger markets. Enough already.
Now is an optimal time to ditch stair-steps in favor of the company’s new $250-per-vehicle bonus plan with rewards for customer service and brand loyalty. When dealers are struggling to get the inventory they need, there’s not really a reason to slash prices at the end of the month — the profit is in the gross margin, not the factory payout.
The stair-step programs did have fans among high-volume outlets, but dealers still complained that targets were set arbitrarily or almost punitively to keep from paying rewards too often. Nissan will be better off with more consistency.
The test will be months down the road, when factories pump out vehicles at a normal clip again and dealers’ lots are flush with newly competitive light trucks. Nissan must resist the urge to backslide.
Last year, Nissan revived stair-steps after company leadership had told dealers that use of them would continue to be scaled back.
This time, make that promise complete, and make it stick.