Nissan’s Diaz: Sustainable Growth Mantra for 2015

NAPA, CA – Nissan was perhaps the most surprising automaker of 2014, setting monthly sales records with products older than most of what the competition offered, or models that were newer but in moribund segments.

Including the Infiniti luxury brand, Nissan achieved its highest sales ever in a calendar year in the U.S. with 1.39 million 2014 deliveries.

How did it do it? By selling the vehicle, not the deal, says Fred Diaz, Nissan North America’s senior vice president-sales and marketing operations in the U.S.

The No.3 Japanese automaker hopes to repeat the magic of 2014, readying three new models for 2015.

A new generation of the Murano CUV went on sale in December but really will get cooking this year, Diaz expects, while the next Maxima sedan launches in the spring and the long-awaited second generation of the Titan fullsize pickup is set to debut in the fall.

Diaz, who in 2013 joined Nissan from Chrysler’s Ram brand, sat down with WardsAuto here during a Murano media preview to discuss what falling gasoline prices and longer loan terms mean for Nissan and the industry, his take on the move to reshape automotive retailing in the U.S. and his favorite car of 2014 that wasn’t made by his company.

WardsAuto: Did you ever think you would have to worry about falling gasoline prices in the U.S.? How is that impacting Nissan?

Diaz: I think it’s a welcome sign for consumers, because what that does is…it gives consumers, who maybe are on the fence about buying a vehicle, (the confidence) to go ahead and buy a vehicle, which is fundamentally a reason why I think the (seasonally adjusted annual rate) continues to grow robustly the way it has been.

So (the Nissan brand) continues to have the best MPG lineup in America, which is a great thing to have, and intuitively it makes you think, “Is that going to hurt us now, because people are going to go to trucks (and) bigger SUVs?” The reality of it is, it hasn’t hurt us one bit. As a matter of fact, it’s helped catapult a lot of our sales. So I’m happy to see it. America has more disposable income to spend. (Americans) have to spend less on gas. And I think America hasn’t forgotten a valuable lesson about how easily gas prices can fluctuate.

WardsAuto: But won’t cheaper gas hurt sales of the Leaf EV?

Diaz: Even when you have a Leaf, gas is still $2-something per gallon, so if you don’t have to have a gas payment why have one? And we’re finding more and more it’s a great second vehicle for people who just have to get back and forth to the grocery store.

WardsAuto: New-car financing terms are increasing in length beyond 70 months, subprime loans are on the rise and incentives are climbing. Which trend is the biggest threat to market health? Is the industry in danger of suffering a 2008-like downturn?

Diaz: I think getting back to what America learned when gas prices fluctuated and got up to over $5 a gallon, I think the automotive industry – I hope the automotive industry – has learned a valuable lesson about not putting too many incentives on a vehicle.

I think getting too far out there with long-range financing can also be a danger point for us. We watch that very closely. At this point, we’re not doing anything crazy and selling too many vehicles to consumers (with loan terms of) well over 72 months. I think everybody at some point in time sees a reason and a value for going into longer-term financing. We are running a very disciplined operation when it comes to incentives and not giving our vehicles away, instead selling the value proposition and the brand and styling of the vehicle.

The only danger I would see is if we end up getting into a major war, a major battle with all the OEMs, where we keep doing what we did when we went into the crash, which is just throwing money after money after money, and getting to the point where your margins are so razor thin you can’t turn a profit.

WardsAuto: Nissan has a longer loan term than 60 months?

Diaz: We only do it in very certain cases, with people that have the wherewithal and the credit score to be able to have that kind of a longer-term loan. But I know we keep it to a very small number.

WardsAuto: What was your favorite vehicle you drove this year that wasn’t a Nissan?

Diaz: I did drive a Tesla Model S. We brought one to the Nissan North America (headquarters) area (near Nashville). It was fun to drive. I was impressed with how big the (center-stack touch-) screen was and the sheer horsepower and torque (leaving) a stoplight.

WardsAuto: What’s your take on Elon Musk’s attempt to change automotive retailing in the U.S.?

Diaz: I understand what he’s trying to do with direct sales, but I think our dealers are the cornerstone of how this industry works. I’m a 100% supporter of our dealers and our dealer model that we have in this business right now. We have great dealers that take care of customers and meet their demands and needs. Of course, there are some dealers out there that have an opportunity to improve from a customer-satisfaction standpoint. But I am 100% a full proponent of keeping the dealer model exactly the way it is.

WardsAuto: Some executives have told me they think his mall stores have a lot of promise.

Diaz: I think setting up boutiques in malls (as Tesla does) is a smart idea. I think it gives people the opportunity to shop like they’re buying a pair of shoes or jeans or whatever it may be. And I think it’s more comforting and cool for somebody that let’s say is in their 20s, maybe even in their 30s.

But I also think you have to create an atmosphere where these younger buyers love and feel comfortable buying online. I think that’s the next frontier: being able to adequately and properly consummate a deal online. Come in, test-drive the vehicle, make sure the color looks as good as it did online and say, “OK, I’m in. The deal I just printed out is what I want, let’s go.”

WardsAuto: Do you have a forecast for this year?

Diaz: I’m not going to speculate on a projection for (2015)…(but) sustainable growth is what we’re looking for. We don’t want to grow, and grow the wrong way, by giving our vehicles away.

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