Nissan is awash in outdated models as car buyers look elsewhere

TOKYO: Waiting times for Nissan Motor Co. cars in Japan have shrunk far below those of other local brands, the latest sign of weak customer demand threatening to worsen the carmaker’s slumping profits.

While the country’s other major carmakers take half a year or longer to ship a new vehicle in Japan, many of Nissan’s most popular models can be delivered within a month or two.

Similar dynamics are also playing out in the US, where inventory levels are typically higher: Nissan had an average of 109 days’ supply in October, well above the industry average of 85 days and Toyota Motor Corp.’s 35 days, according to market researcher Cox automotive.

Part of that is a lack of popular hybrids, another reflection of the challenges facing Nissan, where an outdated product lineup and inventory backlogs are fueling a cycle that threatens to hasten the carmaker’s decline.

Elevated spending on sales incentives is cutting into profit, which shrinking, forcing the Nissan to shed 9,000 jobs and cut a fifth of capacity.

"It’s a deteriorating brand,” said James Hong, an analyst at Macquarie Securities Korea Ltd.

"Having no hybrids is one thing, but the company’s response to a changing situation was very, very slow.”

Driving a new car off the lot isn’t a concept that exists in Japan.

Regulations and paperwork, along with less space for inventory, means it can take weeks or months to get your hands on a new set of wheels.

But Nissan’s LEAF, Sakura Note and the Serena - its best-selling family van - can be handed over relatively quickly, according to delivery data and checks at dealerships.

By comparison, most passenger cars in Toyota’s current lineup take around six months to deliver. The wait for a Prius is about five months while the ¥5 million (US$33,200) Supra takes more than a year.

The carmaker stopped accepting orders for the GR86, another sports car, to let production catch up.

A Honda Motor Co. dealership in Tokyo meanwhile said most major models - including the Fit, Freed and Civic Type R - are out stock or have had their deliveries temporarily suspended because of too many orders.

A stale lineup is arguably Nissan’s biggest challenge. The company’s tendency to concentrate the timing of product roll-outs and give models a long life cycle means dealerships are selling at a loss while customers are stuck with bloated price tags, according to Hong.

Chief executive officer Makoto Uchida cited weak sales in the US and China when he announced in early November the company was lowering its full-year profit guidance by 70%, and plans to terminate 9,000 jobs and cut production capacity by a fifth.

Nissan saw production shrink 7.4% from January through October in Japan, and decline 12% in China and 11% in the US.

While Japanese legacy brands have seen a broad decline this year in several major markets, in Nissan’s case the pain was twofold, as it didn’t have hybrids that could compete in North America with Toyota or Honda, nor has it rolled out EVs that can keep up with the likes of China’s BYD Co. or Elon Musk’s Tesla Inc.

Nissan said it plans to debut a plug-in hybrid variation of the Rogue in the 2025 fiscal year, followed by one using its e-Power gas-electronic powertrain the year after that.

Its last significant updates were the Pathfinder and Frontier in 2021.

To address the situation in the US, Nissan slashed production of two of its most popular models - the Rogue crossover and Frontier mid-sized truck - in September and October to reduce excess supplies of those vehicles.

"Nissan’s product simply cannot compete with its direct competitors. Dealers need incentives to help move increasingly dated inventory,” auto dealership consultant Haig Partners wrote in its latest quarterly report.

To ease the strain and reduce overhead costs, the automaker has begun letting its dealers sell Nissan-badged mainstream models and premium brand Infiniti models under the same roof.

It also instituted a short-term program in September to pay dealers bonuses for meeting volume targets on the Rogue and Frontier, which some welcomed as a way to offset losses, but others viewed dimly as an inducement for cutthroat pricing.

Ahead of the US Black Friday sales event last month, Nissan rolled out promotions such as 0% financing for 60 months on 2024 Rogue models.

"They’re really getting aggressive on that,” said Roland Lynn, a general manager with Dallas-area dealer Clay Cooley Nissan. "They didn’t do it because they were selling like hotcakes.”

Nissan is seeking to stem a slide in its US market share - from 6.2% in the first nine months of 2021 to 5.6% in the same period this year - with a just-launched, roomier version of its Kicks subcompact boasting a low starting price of US$23,200.

It will also start sales by year-end of a revamped Murano mid-size SUV and renewed Armada full-sized SUV.

And it plans to belatedly introduce a plug-in hybrid version of the Rogue next year and a regular hybrid of that best-selling model in 2026.

"We do see potential for growth in the years ahead but want to do it in a healthy and sustainable way,” said Brian Brockman, a spokesman for Nissan’s US operations.

The svelte makeover of the Kicks already is turning heads and drawing interest from buyers worried about new-car affordability, said Lynn, who sees it as a big improvement.

"The older model looked like a roller skate.”