During this year of economic recession, persistent uncertainties, and global fear of an invisible but deadly coronavirus, the pre-pandemic success story of Nissan Philippines, Inc. (NPI) inspires.
As the national sales company of Japan’s Nissan Motor Co. Ltd. in the Philippines formed upon the consolidation of Universal Motors Corp. and Nissan Motor PH in 2014, NPI first caught the attention of auto industry pundits when it rose from seventh place in the 2018 first quarter Top 10 Sales Performers list to overtake and replace Isuzu PH Corp. at sixth.
By the end of the first semester of 2018, NPI had leapfrogged over Honda Cars PH, Inc. and Ford Motor Co. PH, Inc. to grab fourth place. NPI accomplished this feat by selling a total of 13,222 vehicles year-to-date March 2018 versus 10,651 in the same year-ago period.
By the third quarter of 2018, NPI was nipping at the heels of third placer Hyundai Asia Resources, Inc. (HARI) by scoring YTD total vehicle sales of 24,507, nearly 30 percent more than the 17,365 units sold in 3Q 2017. Only 933 unit sales stood between HARI and NPI for the coveted 3rd place in the Top 10.
The year 2018 ended with a difference of only 499 units sold between HARI and NPI: HARI’s 35,401 units sold versus NPI’s 34,952.
59.3% LEAP IN SALES. By the time the first half of 2019 ended, NPI had overtaken and dislodged HARI by selling 21,060 vehicles YTD while the Korean brand sold 17,654 vehicles. According to the stats of the Chamber of Automotive Manufacturers of the PH, Inc. (CAMPI) without taking into account the sales data of the Association of Vehicle Importers and Distributors, Inc. (AVID), NPI had scored an astounding 59.3 percent leap in sales in the first sem of 2019 compared to the 13,222 units NPI sold in the same year-ago period.
When 2019 ended, NPI had expanded its lead over HARI to 8,934 units by selling 42,694 vehicles versus HARI’s 33,763.
Throughout this pandemic year, NPI has successfully maintained 3rd place in the Top 10 list, albeit with much lower sales figures like all the other brands. At the close of Q1, NPI’s lead over HARI was 3,056 units sold and by YTD October 2020, NPI had widened its lead to 4,167 units.
Interviewed last February (before the COVID-19 outbreak), NPI president and managing director Atsushi Najima said that the company’s continuous growth year on year is focused on the fundamentals: Product, Customer Experience, Service, and People.
INCENTIVES. He revealed that sales targets, which are broken down per month, are distributed to the network of dealers at the beginning of the fiscal year. To further motivate its sales force, NPI organizes incentive trips for dealers who are able to hit their targets.
While getting additional incentives for hitting their sales targets, dealers are expected to dispose of their inventory within three months to save on cost of money.
Not many know that NPI’s dealer network has been reorganized into clusters along the “hub and spoke” automotive retailing model.
Years before the coronavirus-instigated lockdowns pummeled the Philippine automotive industry, “hub and spoke” automotive retailing was becoming popular in markets abroad.
HUB&SPOKE FORMAT. In a “hub and spoke” format, instead of having numerous showrooms in each market area providing the same function to customers, dealers remodel the smaller facilities to focus solely on after-sales and workshop services that support a larger flagship showroom.
This is a multi-channel approach that incorporates dealerships (hub)/aftersales facilities (spokes), retail units in high foot traffic locations and a user-friendly online presence.
Colliers International reported in 2018 that BMW/MINI and Mercedes-Benz have adopted a “hub and spoke” network of facilities in the United Kingdom, and that Volkswagen will restructure its dealer network across Europe in the “hub and spoke” format from 2020 onward.
A board member for sales of the VW brand said that they have adopted this approach because the business environment is changing at a breathtaking pace in view of new technologies, changed customer expectations and new market players. The “hub and spoke” network strategy is key in the battle to retain car buyers’ attention amid a growth in online alternatives.
DEALERSHIPS REMAIN. Over here, NPI was among the first brands to set up a virtual showroom. Still, despite the industry’s accelerated transition to virtual showrooms and contact-less, digital marketing because of the pandemic’s social distancing protocols, it appears that brick-and-mortar dealership networks will remain and undergo innovation.
As a Close Brothers Motor Finance survey has pointed out, “Given that a car purchase is such a major financial commitment, the comfort factor of a dealership still counts for a great deal. The continuing popularity of dealerships is grounded in the positive experience that customers receive, including detailed product knowledge, ‘special pricing deals’ and ‘extras’ that staff are able to add on. .. We believe that the dealership, especially the ‘hub and spoke’ format, will thrive and have many years of longevity.”
NPI’S STRATEGY. In this context, a reliable source told PDI Motoring that the clustering strategy of NPI’s 47 dealerships aims “to improve the brand and product image of Nissan by minimizing if not removing price discrepancies between dealers; consolidating and strengthening the dealer resource in an area rather than competing with each other; improve the market coverage of each cluster with their ‘hub and spoke’ strategy.
“The main dealer or the hub has centralized operations to support the whole cluster with flexible add-on modules for better customer experience. They are put in the area with highest population density. Then the dealers have smaller outlets or spokes in the secondary market areas, to reduce the footprint but with one-stop-shop offering for both sales and service.”
Looks like the “hub and spoke” dealership strategy of Nissan PH, Inc. will boost the continuation of its winning sales performance.
Aida Sevilla Mendoza is fascinated by everything about cars: their power, styling, design, technology, craftmanship, exciting history of motor sport through the years, and the ever-evolving industry that creates them. But above all, she enjoys driving, especially on a traffic-free expressway where she feels the connection bonding her and the car.