Nissan's Sales Slump Cause Is "Ghosn's Appointments"

    The stagnant sales in Japan were caused largely by the misjudge on the ability of the sales staff in the field and psychology of the Japanese consumers. In Japan, lower priced cars are gaining popularity as indicated by the fact that light automobiles were record breaking sales. Moreover, there are many rivals on the small car market and consumers take longer time in deciding which car to buy. Under these circumstances, Nissan's way of doing business has so far showed negative result.
    Over the period of five months between September 2004 and January 2005, Nissan had put on the market six new models. The company could not achieve any result it had expected as Ghosn himself said that the Japanese market was miscalculated.

Introduction Of New Models Brought No Effect For a Long Time

Carlos Ghosn (left) and Toshiyuki Shiga (right). How are they going to breakthrough the slump?

    New models were introduced one after another so rapidly that the sales people could not have enough time to remember the sales points of each model. Also, the consumers were unable to make up their mind as to which model of the cars they really wanted to buy, putting off the conclusion of their purchase contracts. It lasted a long time because each of the new models did not really have the chance of appealing its strong points to the customers.
    Later, the company made the full model change of the Serena, WingRoad and Bluebird Sylphy cars and received OEM (original equipment manufacturing) supplies of Otti from Mitsubishi Motors Corp. But the dealers remained unrecovered. The market was demanding the supplies of compact and light cars. Nissan did not make a noticeable move until it made the full model change of Moco, OEM supplied by Suzuki Motor Corp., in February of this year.
    Toshiyuki Shiga, Chief Operating Officer, admitted that the declines after October 2005 were more than expected. He also recognized that the "Nissan Value Up" which was aimed at shifting the direction toward a revenue-oriented policy was a main reason for the sales decrease.

Caught In A Vicious Cycle Of Cost Cuts

    The situation then was such that the Nissan dealers had either to raise the gross profit margins or reduce the personnel or other cost and expenses in order to make profits. There were no incentives and it would be difficult to sell cars at reduced prices. In the absence of new model cars, the dealers could do nothing but choose to cut expenses. The issuing of ad inserts was cut down and sales people who were not doing well would be replaced. Little progress could be made in the strengthening of the sales group because the dealers gave up their effort attracting new customers, while the human resources were limited. The situation could only be described as jumping into a vicious cycle.
    The domestic sales are likely to continue to fight an uphill battle until this fall when the company will come up with the full model change of Skyline and Otti. Besides the products, there are other things to worry, however.
    Since Ghosn started to hold concurrently the presidency of Renault, the operators of the dealers feel that the decision making process within the company have slowed down. Shiga said when he assumed the position as chief operating officer, "My role is to see to it that the company would not be negatively affected by the president's concurrently holding of the presidency of Renault. It should be avoided that the workers have any insecure feeling or lose the vitality to challenge toward reform." Unless the executives of Nissan show their leadership and power of action to wipe out the anxiety of the workers stemming from Ghosn's serving of the two positions simultaneously, the company may miss the chance for sales increase.