Nissan Motor Co., Ltd. (A): The Hakone Pilot

Case Solution

David Weinstein

Nissan Motors Ltd. went through a spectacular turning point under the leadership of Carlos Ghosn. However, despite strong growth in new car sales, auto parts “aftermarket” in Japan was unable to keep up, hurting dealer profitability. Since dealer profitability is a critical success factor in the automotive industry, Nissan decided to encourage its Japanese dealers to (1) improve their cost structure, (2) improve their management methods, and (3) boost the ” customer traffic “through better marketing strategies. to stimulate. The after-sales department identified a Toyota dealership that actually managed to increase its profitability by working on these three factors, and its president agreed to benchmark Nissan against its operation. The department decided to replicate the management methods, costs and strategy of this Toyota dealership. The latter includes significant discounts on the fees for roadworthiness tests that dealers can take on behalf of the Japanese government. Many Nissan dealerships have objected to this pricing approach and to convince them that the company is executing the strategy on a “pilot” basis at Hakone, testing the approach and hopefully creating a showcase. While initial results have been encouraging, market share growth appears to be stabilizing, possibly confirming the arguments of doubting traders. The case creates significant controversy in MBA and Executive classes and includes discussions about market segmentation, pricing strategy, channel design, and dealer network management issues. The case includes a detailed discussion of the dealership “business model” that allows the class to examine the financial implications of various strategic scenarios for both Nissan and its dealers.

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