Nissan Maintains Values as Fleet Sales Grow

Nissan North America is in the middle of a campaign to overtake Honda and claim 10 percent of the U.S. market.

But can it achieve this goal without sacrificing its residual values?

So far, the answer is, “Yes.”

Zohaib Rahim, manager of economics and industry insights at Cox Automotive, said Nissan has experienced normal depreciation in the past year in line with its cohort.

This is during a time when it increased fleet sales, especially into the rental market.

Rahim said Nissan increased sales into the rental fleets by 300,000 units in 2017.

“Nissan has definitely relied a lot on fleet sales for new-car sales,” he said.

This usually creates a challenge for maintaining residuals.

The Altima ranked as the No. 1 vehicle offered at auction last year.

Saturation in the fleets damaged the Ford Taurus and the Chevrolet Cavalier to the point both nameplates were retired.

Ford later revived the Taurus name, only to announce its discontinuation again in April.

“When fleet sales remain in the industry average range, it helps to provide more visibility to the brand,” said Anil Goyal, Black Book’s executive vice president, operations.

“However, excessive reliance of fleet can be damaging to the future used vehicle values. It creates an excess used supply as more vehicles come flooding back to the remarketing channels when these vehicles are retired from fleet service, particularly rental.”

Goyal said there is additional residual risk because manufacturers will use incentives to make additional fleet sales.

Rahim said Nissan has been helped out by a number of factors.

One is a relatively strong wholesale market created by a combination of last summer’s hurricanes and a good spring market.

According to ADESA, wholesale prices avoided a year-over-year decline until this March. Meanwhile, the Manheim Used Vehicle Value Index reached a six-month high in April.

The other is a good mix of vehicles, including the Rogue crossover.

Finally, sedans still have buyers, even if more people are moving to larger vehicles.

Rahim said one in three consumers are still buying cars despite reports of the sedan’s demise.

Nissan has made several management moves in the past few months to help its cause.

Last year, Joe Guarascio’s role was expanded from director of fleet sales to director of fleet and pre-owned strategy and sales.

In this expanded role, Guarascios is responsible for delivering a holistic certified pre-owned strategy to drive sales and residual value performance.

Marty Gleason, formerly senior manager of Nissan used and certified pre-owned, was promoted to director of fleet sales.

For now, Nissan looks like it can have both its growth and its residual values, too.

 

Last modified on Thursday, 24 May 2018 23:03

Please publish modules in offcanvas position.