Mexican-Owned U.S. Dealerships Raise Questions

Am I the only one who hs a fundamental problem with Nissan's latest move to bring dealers into the U.S. from Mexico?

Initially it’s Texas, California, and probably Florida, Illinois, Arizona, New Mexico, and then the rest of the country.

Nissan is promoting Mexican dealer operators to own and run retail Nissan dealerships in the U.S. Now, understand, we’re not talking about American dealers with Mexican heritage. No, we’re talking about foreign-owned companies that currently have dealerships in Mexico.

This is one of those times where I think there ought to be a law. I’m not sure if there is a law that prevents a manufacturer from importing foreign ownership of U.S. dealerships.

I suspect some American dealers are about to get the shaft bigtime. Through the years, I’ve written repeatedly that Nissan has a reputation of being heavy-handed with its loyal dealers with its policies, stair-step incentives and various programs.  

Backed by an army resembling Darth Vader’s Storm Troopers in authority and intensity of enforcement, Nissan CEO Carlos Ghosn cruises around in the Death Star continually projecting and revising goals they never hit.

Enter José Muñoz, a Spaniard with a degree in nuclear engineering as well as an MBA. He is credited with making Nissan No.1 as head of Nissan Mexico, skyrocketing it to a 25% market share.

Although, it may not have been obvious at the time, it appears this dealer infusion may have been the master plan several years ago when Ghosn tapped Muñoz to head up North America.

What happens to the American dealers who have historically invested in their communities? Are these Mexican dealers going to receive any preferential treatment, subsidies or advertising?

Are these going to be new points or are they going to buy out existing dealers? Will Nissan pressure existing dealers they deem as under-performers, and force them to sell?

History is the best predictor of future behavior.

Nissan has traditionally seemed to blame its dealers for the brand’s failures and under-performance in the marketplace. The automaker’s management and Ghosn have never accepted responsibility.

Of course, when you consider that Nissan achieved a 25%-plus dominant market share in Mexico under José Muñoz’s leadership, it stands to reason Ghosn might see a window of opportunity in the U.S., what with the high number of Hispanics in many states and immigration reform on the horizon.

We’d have Mexican ownership of dealerships presumably with Mexican employees that speak Spanish. The logic is that certain consumers in the U.S. would rather buy vehicles at a store like that.  

Here’s the Ziegler forecast. First, this isn’t Mexico, not yet anyway. Nobody, not even the Mexicans, will deny that the government down there is corrupt at every turn. (Some say what’s the difference here, but that’s another article.)

These Mexican dealers are going to have to operate under our laws and standards. I know for a fact that the way dealerships operate down there would not be legally acceptable.

In Mexico, some dealer groups own every retail outlet in their city with virtually no same-brand competition.

Of course, announcing they are going to do this is just a little late. Nissan has been quietly easing Mexican-owned dealerships into markets on the West Coast for several years now. In California, San Francisco, Orange County, Irvine and San Juan Capistrano all have Nissan dealerships owned and operated owned by Mexican super groups.

Muñoz candidly points out Houston, San Francisco, Los Angeles, and Orange County as underperforming markets the Mexicans are interested in.

The long and short of it plays out this way. If it was any other manufacturer I’d probably be a little more comfortable with it. Nissan’s track record for fairness and equitable treatment of its dealers has not been admirable.

If it's looking for giant increases in market share, that isn’t going to happen no matter what dealers it brings in. Nissan builds great product but it’s their management and top leadership that needs to look in the mirror.

We don’t expect Toyota, Honda, General Motors and Ford to fall asleep just because some Mexican dealers set up shop in the U.S. Nissan is not getting its butt kicked at the dealer level, it’s the corporate level that needs a house cleaning

Keep those emails and messages coming. Find me on Twitter, Facebook, and visit my Blog at www.AlphaDawgBlog.com

Jim Ziegler president of Ziegler Supersystems based in metro Atlanta, is a trainer, commentator and public speaker on dealership issues. He can be reached at[email protected]. WardsAuto readers also may comment on this article by logging in or registering below.