After nearly a year and a half since its debut at the 2015 North American International Auto Show in Detroit, Michigan, we finally are seeing the market’s reaction to the “tweener” 2016 Nissan Titan XD with actual sales results. Unfortunately for Nissan, the numbers aren’t great. The 2016 sales results for April, May and June are all below the 2015 numbers of the outgoing truck and the July numbers were up over 2015 by less than 20 units. With a hot truck market and a new and improved product, the natural assumption would be sales should be up and the fact they aren’t brings up many questions. Are dealers hurting the sales numbers by holding out for maximum profit? Is Nissan’s lack of dealers in truck heavy areas hurting them? How about the lengthy and drawn-out product introduction process? Or is it as simple as consumers don’t understand this product and the price doesn’t make any sense? It could just be all of the above.
Early sales results of the new 2016 Nissan Titan XD have been slow. What’s to blame for the slow sales?
Before we get into the reasons why, here are a few items to note:
- Using a very rough estimating method, Nissan seems to have a 4-5 month supply of XDs on the ground as of August 8th, 2016. We’ve taken the number of new Titan XDs listed on Cars.com and divided that by July’s sales figures to come up with this estimate.
- According to a reliable source, used Titan XDs are not drawing any interest at dealer auctions, a sure sign of a soft market. Last week, two 2016 XDs were seen at the Manheim auction in Denver. Neither truck brought anything close to market value.
- Nissan has quietly rolled out $5,500 in incentives on the XD, and some local dealers here in Denver seem to be offering new XDs for invoice (or less).
Dealers Maximize New Vehicle Profits
Leading off with seemingly everyone’s favorite punching bag are dealers. Nissan dealers have been making news lately about not being happy with the company and being the first stop for any consumer, an unhappy dealer is not good for business. What also isn’t good for Nissan’s truck business is the dealers penchant for holding out for maximum profit from new truck launches.
Typically, dealers hold off on incentives or offering savings on new vehicles when they are first launched. This gets worse when the new vehicle is loaded with profit like a truck. Nissan dealers have been watching for years as their competitors have reaped large profits while they pushed an old truck. It is hard to argue with their strategy. If I was a Nissan dealer sitting on a new $60k+ Platinum Reserve Titan, I would be hard pressed to drop the price on it.
As it stands right now, Nissan tells us dealers have ample inventory and the trucks just aren’t moving off the lot. With cash on the hood always being a big factor in whether a truck sales or not and dealers willingness to trade sales for profits, this will change.
2016 Nissan Titan XD’s Price Is A Factor
Speaking of profits, the truck’s price is also a factor. In Houston, Texas you can purchase this 2016 Nissan Titan XD Platinum Reserve for $57k or you can purchase this 2016 Ford F-250 Lariat for $57k. Now features are different between the two trucks, but when you are looking for just a tow rig, like a heavy-duty truck provides, it is hard to opt for the less capable Titan even though the ride quality is better with it versus the F-250.
Then, you have the half-ton discussion. Sure the Titan out hauls most half-tons, but asking consumers to pay heavy-duty money for a slightly more capable half-ton could be asking too much.
Plus, a friend of the site watched two 2016 used Titan XDs run thru the dealer auction last week here in Denver. One was an SV package, and it rolled out at 37,500 (meaning whomever was selling the truck wouldn’t sell it at that price). The other was a platinum reserve that rolled out at $43k (again, the seller wouldn’t let it go at that price).
While prices that vehicles don’t sell at aren’t always indicative of a soft market, this is more evidence that the XD just isn’t selling. Dealers are usually pretty good at figuring out what consumers will buy, and the fact that no one is bidding hard for these used 2016s is a pretty good indication they’re not moving.
If you don’t think price matters, consider this example. The outdated Nissan Frontier just had a banner sales month and it is priced at $5k below other similar trucks and it has a $250 rebate plus special 0 or 0.9 percent financing and a $1000 student/college grad rebate offer. The 2016 Nissan Titan XD diesel has the student/grad rebate, but neither of the others.
Lack of Dealer Creativity
Another factor impacting sales is most certainly dealer creativity in building demonstrations for showcasing the truck. With the 2016 Nissan Titan XD trying to break new ground between the half-ton and 3/4-ton market, dealers are going to have to get creative on how to showcase its ability to a consumer.
The reality is consumers like things they can quickly understand and truck buyers are no different. When a truck buyer is looking for a half-ton or heavy-duty truck, they have a general idea on what it can do. However, you throw a new truck between the two and it is simply hard to understand.
How do you then get consumers to understand? You have to educate them. Nissan’s Director of Product Planning for trucks and SUV Rich Miller told us recently told us of a dealer with a hill behind their store. They had a trailer with 10k pounds on it and they have prospective owners tow it up the hill. This kind of real-world demonstration really helps consumers understand how the truck fits, yet not all dealers have a hill behind their store. Without this kind of real-world or word-of-mouth experiences, the XD is going to be a hard truck to understand.
Car Maker Turns Truck Maker, Dealer’s Locations Need to Change
For years Nissan has been primarily been a company focused on selling cars. They have only had a full-size truck since 2003 and most of their early trucks were two-door, compact trucks that are dwarfed by today’s standards. However, they know the market right now globally is heading away from cars and into trucks and SUVs. As they shift, once again dealers come into discussion.
The dealer discussion here is location with many of them located only in major cities along the coasts and fewer in the truck hot bed areas. For example, according to our research, there are 20 dealers within an hour of Los Angeles, California – a small car and mid-size truck market. While in truck-heavy Houston, Texas there are 14. In comparison, Ford has 8 dealers in the LA area and 18 in Houston, Texas. It is no surprise then that Ford sells a lot more trucks than Nissan.
When you get out to the rural areas, it is even worse. For example, while Wyoming doesn’t have the population like in Texas, they do have a lot of truck buyers in their state and the surrounding areas. In Wyoming, Nissan has 4 dealers and Ford has 18.
The facts are consumers don’t like buying trucks without an idea of where they can get parts. If you don’t have a dealer nearby, they won’t buy your truck.
Is the Product Launch Dragging on Too Long?
My final point is the product launch is exceedingly long on this truck. Typically, a truck is launched in about the same sequence. For example, a truck makes its debut at an auto show, media hype builds throughout the next 6 months with journalists attending drive programs, writing first look articles and then the truck gets launched in the midst of even more reviews being published as well as magazines going to print with stories on them (magazines are typically planned 6-9 months out). Consumers visit news stands or visit websites now read all about the new truck and can go to the dealer to test drive it for themselves.
With the case of the 2016 Nissan Titan XD diesel, it was unveiled in January 2015 and hit the dealer lots early in 2016 with small roll out. Nissan tells us dealers really didn’t get much inventory until just a few months ago. This means much of the momentum from the launch was lost while consumers waited for the product to hit lots.
Now, to be fair, other automakers have done similar things like Ford and their 2017 Raptor. However, that is a halo vehicle and they don’t need to cash in on the early hype.
Nissan, on the other hand, needs all the truck hype it can get. This is especially troubling now that we are still waiting for a half-ton to come out. Many consumers, especially those who don’t follow the market that closely, could simply have walked away by now thinking the XD was Nissan’s only truck offering. Throw in Nissan’s decision to skip the standard numerical naming system (XD versus say calling it a 200, then 150 for half-ton) and one begins to wonder if consumers aren’t as confused as some journalists have been over the naming convention and truck varieties.
At the end of the day, take your pick as to why the 2016 Nissan Titan XD diesel is off to a slow start. Nissan realizes how poorly the truck is selling and is planning an 11-city Titan tour to educate the public and its own sales people according to WardsAuto.com story. While this will be beneficial to everyone involved, we have to wonder about the timing and if Nissan should have followed Ford’s lead with their Built Ford Tough events occurring PRIOR to the truck being put on the market.
The fact is I like the 2016 Nissan Titan XD, however, I said before, the challenge isn’t with the truck rather it is educating consumers and sales people why they need this truck. This process is just going to take time and unfortunately, I’m left to wonder how long Nissan will allow the truck to sit on dealer lots before offering even more massive incentives.
The post What’s Behind Sluggish 2016 Nissan Titan XD Sales? Dealers, Marketers or the Truck Itself? appeared first on Tundra Headquarters Blog.
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