Nissan dealers have struggled with profitability amid a glut of inventory and diminishing buyer interest, but the automaker has taken steps to improve the situation. Earlier this year, Nissan implemented new incentives that helped clear some of the overstock, and now, the company is cutting production of two of its most popular models.
The automaker sent an email to dealers earlier this month, saying that it would reduce output of the Rogue and Frontier by up to 40,000 units this month and next. Those two vehicles made up almost 40 percent of Nissan’s sales in the U.S. during the first half of this year, and the Rogue alone represents nearly a third of the company’s volume.
Spokesperson Kyle Bazemore told Automotive News, “We continue to work with our dealer network to manage inventory appropriately, especially for our core models.” Production cuts should help with the oversupply problem, but incentives have been a significant benefit for all parties.
Nissan dealers have carried an average of 83 days’ supply in recent months, closer to the industry average of 81 days. That’s due mostly to the massive savings buyers saw on new models, with the automaker offering incentives that averaged 12 percent of its vehicle transaction prices, nearly five points higher than the industry average of 7.2 percent.
Dealers aren’t convinced that production cuts will be the answer. One told Automotive News, “Instead of trying to generate throughput and increase sales and market share, they are going to cut stuff going down the assembly line.”
[Images: Nissan]
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