Change at Nissan Motor

With sales of spare parts and services lagging behind those of new cars, the pilot programme set-up by Nissan's Aftersales Division in Hakone, Japan, was designed to convince dealers of the need for management change, investment and risk-taking.

by David Weinstein
Last Updated: 23 Jul 2013

If successful it would be replicated throughout Japan. If not, it could further jeopardize the performance of Nissan's distribution network.

With the collaboration of Toru Matsui and Miyako Sanuki of Nissan Motor Co., Ltd, Professor of Marketing David Weinstein examines the pilot programme created as part of the company's turnaround strategy under the leadership of Carlos Ghosn, who was to capture the imagination of executives, staff, and eventually dealers and shareholders, by turning the near-bankrupt company into the most profitable automotive maker in the world.

The Japanese auto maker and its dealers were worried by the recent loss of Shaken business - government-authorized road worthiness and safety tests required by law - which in turn was eating into sales of maintenance services and spare parts. Unless decisive action was taken, Nissan's Aftersales Division expected the slide to continue, playing havoc with its profit performance at a time when it could not afford to lag behind new car sales.

Curiously, the role model for Nissan's Hakone strategy was a Toyota dealership - Toyota Alpha Yokohama (TAY) - which had slashed operating costs, bolstered management quality and marketing activities and reduced its Shaken prices, seeing a leap in parts and service sales, customer traffic, car sales and profits as a result. With its 235 employees, TAY was an often-cited example of management excellence in the Japanese auto industry.

Although Nissan's Aftersales Division was convinced that the adoption of TAY's benchmarks was the way to go, many dealers hesitated to commit to this strategy. The challenge was to persuade them of the need for major managerial change, disruption and uncertainty, as well as investment, before they saw any positive results.
 
Nissan Motor Co., Ltd
The Hakone Pilot (A&B)
David WEINSTEIN

INSEAD 2006

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