Fixed Ops Journal - August 2019 - F24

FIXED OPS JOURNAL

Iowa dealer Dave Wright says he doesn't take an
active part in Nissan's stair-step program because he
fears its effects on his service department, above.

DOUBLE-EDGED SWORD

Nissan sales incentives attract service customers who can't pay, skeptics allege

KEN WYSOCKY
foj@autonews.com

tional services requests, no is no. It's hard to
sell service in the drive when people can't
even afford to change the oil in their car. If it's
not warranty work, they just take a pass."
Steve Yaeger, manager of safety, dealer and
heritage communications for Nissan North
America, declined to respond. "We aren't providing comment on our dealer programs or private business discussions with our
dealers," Yaeger says.

s Nissan Group executives ponder
the fate of the automaker's controversial stair-step incentive program
to boost new-vehicle sales, critics
claim the plan is having negative effects on
Nissan dealerships' fixed operations as well as
their sales departments.
Jim Richter, a fixed ops consultant
in Calera, Ala., says the aggressive
sales targets in Nissan's incentive
No 'race to the bottom'
program encourage many of its dealDave Wright, owner of Dave Wright
erships to sell more vehicles to subNissan in Hiawatha, Iowa, says his
prime borrowers with lower credit
dealership does not actively particiratings. These customers, Richter
pate in the stair-step program, partly
says, often can't afford to pay for even
out of fear of an adverse impact on
the most basic post-sale repairs or Richter: Owners
fixed ops revenue. "If we hit [a sales
maintenance that dealerships in- reject service.
quota], we hit it," he says. "If we don't,
creasingly rely on for profits.
we don't.
"Anytime you create a customer who doesn't
"We are not going to race to the bottom to
have the financial wherewithal to take care of
hit the sales objectives," Wright says. "In a race
a product, something's got to give," Richter
to the bottom, you typically get customers
told Fixed Ops Journal. "In this case, it's serwho aren't loyal and don't return for service. All
vice. You can do all the walkarounds you
want, but if customers can't afford the addisee STAIR-STEP, next page

PAGE 24

AUGUST 2019

Stair-step criticisms

Among the ways Nissan's stair-step
sales incentive program hurts its
dealerships' fixed operations, critics
say:
 Aggressive sales targets encourage
dealerships to sell more vehicles to
customers with poor credit ratings
 Service retention rates for nonwarranty customers decline
 Rejection rates for maintenance and
repair work recommended by service
advisers rise as many customers
can't afford it
 Declining service revenue forces
dealerships to rely more on selling
wholesale parts
 Automaker limits on parts returns
inflate dealership inventories of
obsolete parts
 Declining service absorption rates
put even more pressure for profits
on vehicle sales

Fixed Ops Journal - August 2019

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