​​Nissan US Signals Turnaround With Major Reforms

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Signs of improvement are emerging in Nissan Motor's struggling United States sales. Its new-car retail sales share, which was 4.2% in December 2024, climbed to 5.6% by June. This is the highest level in nearly three years, and it remained around 5% in July. 

The sales rebound, achieved even without major new model launches, reflects the impact of the "selling power" reforms implemented under President Ivan Espinosa.

"We are at a pivotal moment for this company. We are taking action fast to address our weaknesses and strengthen our business fundamentals," Espinosa said at Nissan's US National Dealer Meeting in Las Vegas on August 20. 

It was his first time attending the event since his appointment in April, which drew some 2,500 participants.

The success of the latest initiatives in the US raises the possibility that they could be applied to other markets, including Japan. What then do these reforms entail?

New Leadership, New System

Starting this fiscal year, Nissan revised its evaluation system for dealerships. Under the new system, introduced in June, bonus payments for sales staff, previously determined by around 20 criteria, are now based solely on vehicle sales volume. 

At the same time, it began cutting back on dealership incentives and scaling down sales to corporate customers such as rental car companies. A dealership incentive is a type of sales promotion expense paid by automakers to dealerships, which in turn is used to fund vehicle discounts or offer preferential loan interest rates to customers.

Retail sales volume, which subtracts corporate sales from total sales, is a proprietary metric Nissan closely monitors to assess the effectiveness of these initiatives.

The company's market share surpassing 5% for two consecutive months beginning in June suggests that the measures are already yielding tangible results.

Nissan's total new-vehicle sales in the US fell 11.6% year-on-year in June and dipped 0.3% in July. But according to research firm MarkLines, sales rebounded in August, rising 12.7% to 80,900 units. This suggests that Nissan's retail sales continued to grow, even as the company reduced dealership incentives and limited corporate sales.

Breaking the Vicious Cycle

In the US, dealership incentives are common. While increasing incentives can boost sales, even for less popular models, repeated discounting can erode brand strength. This creates a vicious cycle: products become unsellable without discounts, ultimately cutting into profits.

Moreover, while large-scale corporate sales can boost total sales volume, their profit margins are lower than those of retail sales. Another drawback is that vehicles sold to corporate clients often enter the used-car market quickly, driving down resale values and trade-in prices.

Nissan's North American region, centered on the US, accounted for nearly 60% of the company's consolidated operating profit of ¥568.7 billion JPY (approximately $3.92 billion USD) for the fiscal year ending March 2024. 

However, in the fiscal year ending March 2025, it posted a loss of ¥38.3 billion (approximately $264 million). This decline reflects a vicious cycle of discounting to chase volume, fueled by pressure to meet overly ambitious sales targets amid excess production capacity.

Transforming Sales Practices

The new evaluation system rewards sales staff with bonuses based solely on results achieved through their accumulated customer data and sales skills, rather than relying on discounts. 

By simplifying performance assessments and removing complex criteria related to sales expertise, this approach motivates staff. It also marks a fundamental step toward transforming the sales structure of Nissan's US operations.

Unlike in Japan, where dealerships are tied to a single manufacturer, many US dealers handle multiple brands and tend to prioritize those offering higher profit margins.

Although somewhat belated, the shift toward sales methods that prioritize profitability has begun. As a result, the average gross profit margin for Nissan dealers in the US from January to July 2025 rose to 1.4%, up 0.5 points from the same period last year. 

Some dealers are reportedly using the new evaluation system to reassign experienced sales staff to Nissan dealerships.

Building on the Momentum

Beginning this fall with the US launch of the new Leaf electric vehicle (EV), Nissan will start rolling out new models in earnest. These include the next-generation Sentra sedan and the plug-in hybrid (PHV) version of the Rogue SUV.

The new-car market is facing a challenging profit environment due to the Donald Trump administration's high-tariff policy. 

Nevertheless, expectations are rising for steady improvement in Nissan's US business if enhanced retail sales capabilities and the rollout of new models combine effectively.

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• Nissan Needs A Total Restructuring Plan to Survive 
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Author: Noboru Ikeda, The Sankei Shimbun 

(Read this in Japanese) 

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