The average Nissan dealership makes less than one-third of what the average Toyota dealership does, business broker Alan Haig estimates. That gives Nissan’s retailers a smaller financial cushion to outlast the current business slowdown.
“Some dealers will choose to close their stores and repurpose the real estate for other uses, and some dealers are going to just run out of money,” predicted Haig, founder of Haig Partners LLC.
However, he added, a smaller Nissan dealer network coming out of the crisis would be healthier for the survivors.
As the coronavirus crisis took hold in March, sales at Dave Wright Nissan in suburban Cedar Rapids, Iowa, fell 40 percent from a year ago. Service revenue was down 30 percent for the month.
Given the slim margins, “dealerships can’t afford a 30 percent dip in business,” said the store’s dealer principal, Dave Wright.
Business was difficult for dealers before the pandemic, Nissan National Dealer Advisory Board member Tyler Slade said last week.
“Some dealers will not be able to survive — it’s just too much,” said Slade, operating partner at Tim Dahle Nissan Southtowne in suburban Salt Lake City.
The new question is whether, once the economy recovers, Nissan dealers will struggle to recapture market share, given the automaker’s iffy financial health going into the crisis.
Nissan Motor Co. posted a net loss of ¥26.1 billion ($238 million) for the October-December quarter and cut its full-year operating profit forecast by 43 percent. Nissan Division sales during that late-2019 period dropped 16 percent in the United States.
As a result, “Nissan might not have the ability to incentivize the consumer as much as Honda or Toyota, which have better balance sheets,” Haig said. “The burden of this crisis is going to be felt more by the weaker franchises.”
