By Peter M. DeLorenzo
Detroit. In the aftermath of the Carlos Ghosn rousting, it’s clear that the issues at Nissan run deeper than the fact that the Japanese executives just wanted to rid the company of its aggressively abrasive, megalomaniac of a CEO.
No matter where you come down on the side of the Ghosn situation, he was, after all, a distinguished graduate of Unctuous Prick University and an abusive dictator who lorded over his charges with impunity. But let’s not forget, the so-called Nissan executive management team at the time went along with his outsized demands and relentless goal-setting while approving his expenses because let’s face it, they didn’t have the first clue how to project a better idea or the backbone to do it. Until they apparently decided that they couldn’t put up with his runaway ego one more day.
But leaving that aside – I am not going to list the roster of the Japanese executives at the company who have distinguished themselves with serial incompetence – the fact remains that without Ghosn, Nissan is rumbling, bumbling and stumbling its way to a dark place.
It’s no secret that in many previous columns I have been less than flattering with the way Nissan has gone about its business here. The Nissan product cadence has been a recurring joke and its design executions have been repeatedly cringeworthy, but that’s only the beginning. Its marketing strategy basically revolves around laying massive incentives on the hood and turning out mediocre products to fill its dealer lots so that the “churn and burn” can continue. And when an automobile company conducts business this way it’s inevitable that it will lead to trouble. Needless to say, it has hurt the brand tremendously.
In my Brand Image Meter column last June, I had the following to say about Nissan:
“Nissan marketing is a dismal exercise in futility, and that’s on a good day. So, what is it, exactly? The only rational reason – and I am paraphrasing a hoary adage by H. L. Mencken here – is that no one ever went broke underestimating the intelligence of the American public. As in, mediocrity, when it comes to automobiles, is bliss for most consumers, because at the end of the day too many of them don’t understand the difference and couldn't be bothered to care. Confounding and tragic, but there you have it. And despite Carlos Ghosn’s promises of global dominance, nothing has changed to alter my assessment. (Can’t auto CEOs just be content with doing well without veering into talk about dominating the market? Ha! What was I thinking?) For those who revel in abject mediocrity, Nissan is just the ticket.”
Not exactly a rousing endorsement, but it’s much deserved. Nissan is one of those car companies that has evolved into a Twilight Zone of irrelevancy. The brand’s claim to fame only extends to the fact that it is present and accounted for in the market, and if that’s not enough to dilute its image, the brand takes it one further by jamming rental car fleets and exposing its relentless mediocrity to a wider, dismissive audience.
This just in: This simply isn’t sustainable. And everything I see coming out of Japan is that Nissan executive leadership is in such turmoil that they’re unable to lead their way out of this quagmire, with or without merger partners.
But there’s a Bigger Picture to Nissan’s chaotic situation too. It speaks eloquently as to the basic fragility of this business. Nissan has been able to muddle along for a long time with its “churn-and-burn” strategy, perpetuating its mediocrity year after year to a faction of the consumer public that has reduced expectations when it comes to transportation. But it’s clear that this shallow strategy is running out of steam, and time.
There are no givens in this business and there are fewer guarantees. An auto company can be rolling strong for years to the point that it becomes an assumption – internally and externally – that it will go on forever. But those are dangerous assumptions.
Take Audi for instance. It has been piling up sales records with what looked like an unstoppable momentum. But guess what? Audi is now in the throes of big-time trouble. Its sales have slipped almost nine percent in the first four months of the year, and it’s caused, according to Audi, by a mismanaged product supply to the U.S. due to emissions testing requirements in Europe. Which means its hottest selling Q3 model is out of stock, with the new one not hitting dealerships until late this year. That’s a heaping, steaming bowl of Not Good, because even Audi loyalists are wondering off to competitive brands. Just ask Audi dealers.
But that’s not all that’s going on with Audi, and it is part of the general malaise going on in the market too. As I’ve said repeatedly in the last few months, affordability has become a serious issue. Prices are just too high, and even luxury-oriented buyers are giving pause. And the manufacturers aren’t blameless in this, far from it, in fact. Look at the softening in Jeep sales. I’ve heard all of the excuses, but the fact remains that FCA has gotten seriously greedy with its pricing – particularly with its Jeep options – and people are beginning to get the fact that Jeeps aren’t nearly the value that they once were. Those are self-inflicted wounds that this business has been long famous for, which points to the fact that there’s nothing really new under the sun, especially when it comes to short-term thinking and flat-out greed.
Back to Nissan. If Nissan’s Japanese executives actually believe they can extricate the company from this mess in a short period of time, they are sadly misguided. Because of product cadence, poor product execution and a vacuous marketing strategy, it will take the better part of a decade for Nissan to get back on track. Suffice to say, Nissan’s continued presence in this market is not guaranteed by any stretch.
In fact, I wouldn’t be surprised if the company is merged or absorbed, because it’s clear that Nissan’s Japanese executives spend most of their time searching for a clue. And in a business that runs on “what have you done for us lately?”, that’s just not going to cut it.
And that’s the High-Octane Truth for this week.