Infiniti Canada has a plan in place to permit its dealers consolidate both the Nissan brand and luxury brands under one roof in an effort to lower brick-and mortar costs following the rise in online shopping.
Some retailers are critical of the move by Nissan to standalone retail stores. They claim it will require expensive renovations and neglect the true problem faced By Infiniti, which is a lack of product.
Rick O’Neill is the president of O’Neill Auto Group. O’Neill Auto Group operates an Infiniti shop in Mount Pearl just outside St. John’s. Now they say we don’t know if the throughput will be sufficient.
Infiniti Canada’s managing director Steve Rhind stated in an email, that Infiniti Canada had to “reevaluate its product strategy” after the company moved its headquarters from Canada to Japan in 2011.
He said that Infiniti is refocusing its luxury offerings on customers, and was committed to providing buyers with choices. However, he declined to comment about future products.
According to Infiniti, 24 of its 37 dealers are independent stores.
The current lineup includes the QX50 and QX55 utility vehicles as well as the Q60 two-door coupe and Q60 sedan.
QX60 IS ON THE WAY, BUT IS IT ENOUGH? __S.10__
Infiniti’s launch of this new QX60 midsize crossover in the fall is seen as a promotion for its franchise. O’Neill is concerned that it may be too little too late.
He said, “You cannot make a franchise with one model.” There is no other model on the horizon in two years.”
Infiniti began directing dealers around a decade ago to create upscale shops to display the brand’s luxury products.
O’Neill stated that he now loses $350,000 per year from his Infiniti shop.
They want me to spend more money on my Nissan building in order to get Infiniti into it.”
Groupe Beaucage president Daniel Beaucage said that he doesn’t plan on closing his Infiniti shop in Sherbrooke (Que.
Beaucage stated that it would take $6m to $7m to retrofit his Nissan store in order to make room for the Infiniti operations.
He said, “It is too expensive.” “But I am still committed to the Infiniti Building.”
Rhind stated that the strategy was designed to lower dealer costs and increase economies of scale. This is especially important as online shopping increases.
He said that the switch should have less impact than it did in the past because the COVID-19 epidemic has increased online vehicle sales, as well as pickup and delivery.
Customers are shifting their expectations. Dealers are now asking for an entirely new approach when it comes to how their facility should look.
COSOLIDATION MAY BE OPTIONAL
Rhind stated that the roof consolidation plan was not required.
Dealers have the option of this. They can work with us when they wish.
He stated that before the pandemic nearly 27 percent of dealers were in “a dual or synergy shop”.
The building might have a Nissan and Infiniti at the left, with a service car in the middle.
Rhind refused to speculate as to how many dealers would make the change. We are still having conversations, and we do not know how many dealers will make the switch.
Infiniti insists that dealers have their own customer entrance and in many cases a dedicated service lane to ensure brand differentiation.
Rhind stated that there would not be any showroom inside the showroom. You will find dedicated Infiniti salespeople and dedicated Infiniti support people to ensure that the customer enjoys a superior experience.
SALES PLUNGE
Dealers stated that in many instances, this will involve exterior and interior construction work as well as additional investments in materials and signage.
Beaucage stated, “New decoration and new tiles are required. Everything must be updated.”
Infiniti’s declining market position is reflected in the shift in retail strategy. Sales plummeted and product rollouts slowed. After a peak of 12,581 units in 2018, deliveries in Canada dropped to 5,783 units in 2017. Sales totalled 10,974 in 2019.
According to Automotive News Research & Data Center, Infiniti has lost 2.8 percent of Canada’s premium market share from 5.9% in 2014.
Increased competition has had a negative impact on dealers gross margins,” said Greg Carrasco (Vice-President Operations at Oakville Infiniti, Oakville Nissan, suburban Toronto).
Carrasco said that online sales are a major driver of auto sales and that “we don’t need huge $30-million facilities” to make the same number of vehicles. He supports Infiniti’s strategy, but it is only a theory.
He stated that Infiniti should support its dealer network in any decision made by individual dealers to ensure a positive outcome.
Clear and transparent communication is the best way to ensure fair treatment of dealers from a financial standpoint.
MAKES SENS
Infiniti’s co-location with Nissan could tarnish the brand’s premium brand image, said Jessica Caldwell. She is executive director of Insights at Edmunds Santa Monica, Calif.
Caldwell stated, “Creating an upmarket dealer with amenities and services that appeals to busy luxury vehicle buyers is an important way to establish a luxury brand.”
However, Infiniti’s strategy is sensible as electric cars become more popular, says David Mondragon (Vice-President Enterprise Product Management at IHS Markit, a consulting and research company in Michigan).
Mondragon is also an ex-Ford Canada CEO. He stated that parts and services efficiency will become more critical as brands move to electric vehicles with lower maintenance and repair costs.
He said that a dual location is “a natural feeder for future sales… As customers mature and purchase more, they will move from luxury to non-luxury.”
When managed well, shared locations could be win-win situations for customer, dealer, and [automaker]
Publited at Fri 27 August 2021, 13:35:00 +0000
