Nissan is navigating a complex landscape with a significant backlog of unsold 2023 Rogue SUVs, compounded by U.S. import tariffs and production cuts. As dealerships grapple with inventory challenges, Nissan's strategic adjustments and incentive programs aim to balance sales and brand value. Explore how these dynamics are reshaping the company's market strategy and dealership operations.
The Challenge of Unsold Nissan SUVs
Nissan is currently grappling with a significant backlog of unsold 2023 Rogue SUVs, with approximately 24,000 units still on dealer lots as of early 2024. This surplus is creating challenges for dealerships as they also begin receiving 2024 models ( source ). The issue is compounded by a 25% import tariff imposed by the U.S., which has led Nissan to reduce production of its Rogue SUV at the Kyushu, Japan plant. This decision will cut output by approximately 13,000 vehicles, impacting over 20% of the 62,000 Rogues sold in the U.S. in the first quarter of the year ( source ).
Incentives and Dealer Reactions
To address the inventory issue, Nissan has introduced a $1,000 incentive for each 2023 Rogue sold, contingent on dealers meeting individual sales targets. This incentive applies to both 2023 and 2024 models, encouraging dealers to push sales of the older inventory. The incentive program is reminiscent of past aggressive sales tactics, last seen during the Covid era and the Carlos Ghosn years, which were criticized for devaluing the brand and creating competition among dealerships ( source ). Dealers have mixed reactions to the incentive program. Some are optimistic, expecting to sell an additional 60-75 vehicles per month, while others are concerned about the long-term impact on customer retention and brand value.
Production Adjustments and Market Strategy
Nissan is implementing significant production cuts for the Rogue and Frontier models in the U.S. to address excess inventory issues. This decision is part of a broader strategy to manage stock more efficiently, with up to 40,000 fewer vehicles being produced in September and October 2024. The production cutbacks will specifically impact U.S. facilities, such as the Smyrna, Tennessee plant, where the Rogue is manufactured. This plant will reduce its production schedule from five days a week to four, highlighting the severity of the oversupply problem Nissan is facing in the U.S. market ( source ).
Impact on Dealerships and Brand Value
Nissan dealerships are facing significant challenges in moving their SUV inventory, including the popular Nissan Rogue, despite its status as a top SUV. This struggle is reflected in the closure of eight dealerships in 2024 and the fact that 38 percent of Nissan dealers are operating at a loss. The profitability of Nissan dealerships has plummeted, with net profits 70 percent lower than in 2023, marking a 15-year low. This decline is partly due to the heavy discounts offered to clear inventory, which, while maintaining sales volume, have reduced profitability ( source ).
Why You Should Learn More About Nissan's Current Challenges Today
Understanding the current challenges faced by Nissan and its dealerships provides valuable insights into the broader automotive industry and market dynamics. The issues of unsold inventory, production adjustments, and the impact of tariffs highlight the complexities of global supply chains and market strategies. As Nissan navigates these challenges, the outcomes will likely influence its future market position and brand perception. Staying informed about these developments can offer lessons in strategic planning and adaptation in a rapidly changing industry.
Sources
Nissan's unsold Rogue SUVs create dealership challenges
Impact of U.S. tariffs on Nissan's production