Is the merger of NMPI and UMC for real?

With news buzzing in the industry that Nissan Motors Ltd. (NML-Japan) is planning to become part of the local Nissan operations by year’s end, many are asking so many questions: Will this mean that Nissan’s two distributors, Nissan Motor Philippines (passenger cars) and Universal Motors Corp. (light trucks and utility vehicles) will merge? Will Nissan restart manufacturing more models locally? Will Nissan introduce more high-end models in the country including Nissan’s flagship model, the almighty R35 GTR and 370Z sports car? Will Nissan Motors Ltd.’s entry be a spearhead campaign for Renault’s re-entry and Nissan’s luxury-division Infinity’s entrance to the local market?

With stories, rumors and chismis running around, I called up some friends and contacts locally and abroad to get a clearer picture on the situation. Here’s what I came up with.

A good friend of mine from Singapore who used to work with Nissan Asean (the regional office under NML) told me that Nissan Philippines has two distributors (which I know of already). One is Nissan Motors Philippines under the Taiwanese Yulon group and the other being Universal Motors Corp.

He didn’t identify which was which, but he said that the sad joke in their office years ago was that one Nissan distributor had no balls to introduce any new and exciting models (for lack of imagination or daring, I guess), while the other, who was very aggressive and promising, lacked the resources to actually introduce, market and service new and exciting models.

Uneasy alliance

But the really sad part was that NMPI and UMC had an uneasy alliance together with NML in distributing Nissan vehicles in the country. NMPI and UMC apparently were always in a turf war as to who had the divine, God-given right to distribute Nissan vehicles in the country.

Back to the subject at hand, the association of Nissan dealerships in the Philippines had written a letter to Carlos Ghosn, Nissan and Renault’s big boss and a veritable turnaround artist. About a decade ago, Ghosn turned around Nissan’s fortunes (or lack thereof) much for the better, and along with it, Renault, which shares platforms and power trains with the Japanese powerhouse.

The unofficial reply was that “yes indeed, Nissan Motors Limited plans to become ‘actively involved’ in the local Nissan operations.” How they plan to become actively involved and when exactly was not yet made known.

Recently, during the Nissan dealers’ conference, representatives from NML held informal dialogues with all the dealerships and parties present, assuring them that the winds of change will be coming very soon. And yet, my source concludes that there were still no specifics, exact dates or a clear outline of what NML’s role will be.

Promising for Nissan

Suffice to say, NML executives will be coming soon to hold office in the country. And that is very promising indeed for Nissan, which right now seems to be the “sick patient” in the industry, languishing away at the bottom, its once glorious image and brand equity chipped off by mismanagement and poor marketing strategy, and lack of resources.

Asked whether Nissan’s flagship sports cars, the R35 GTR and 370Z coupe, will ever be sold locally, I had to sit down, crunch the numbers and reflect on what I knew of Nissan. The GTR sells for roughly P8 million from grey-market importers. Yup, you can find other cheaper imports if you shop around, but these tend to have sketchy tax payments.

For NML to sell the GTR locally, it should secure a JPEPA (Japan-Philippines Economic Partnership Agreement) certification, which would cost NML roughly P100 million per model/vehicle type. With a rumored release of an all-new GTR in 2016 as a full-model change, that means Nissan would have to sell a minimum of roughly 200-250 units of the GTR in 2014 and 2015 to recoup the cost of the P100 million. That’s about nine to 10 units a month.

Not too difficult if you’re used to selling a car rivaling a modest house. And that’s the next question. Can Nissan’s dealership network deal with a new breed of customers who are used to first-class service, excellent product knowledge and confidence, with enough savvy and style to give the buyer confidence? Plus, the necessary supporting infrastructure (i.e., special tools and equipment, and the Nissan CONSULT III diagnostics tool) will cost tens of millions for what will essentially be niche models.

I would have no qualms about buying a high-end European car (think Audi, BMW, Bentley, Lamborghini, Porsche, Mercedes-Benz, Jaguar, Ferrari, Maseratti, Range Rover, MINI) from their local distributors, because the people behind them exude a certain image and, crucially, product knowledge about the cars they sell, which puts me, the buyer, at ease about spending large wads of cash on what is ultimately a toy.

Lexus was able to shed its high-end Toyota image because dealing with the people in Lexus is like dealing with very highly educated, articulate and smart people who live and breathe the Lexus lifestyle: balanced, harmonious and efficient, with Zen-like ease.

While I laud that Nissan continues to soldier on with its limited lineup, they lack the finesse and pizzazz to market a high-end product. Yes it can be done, but it will take time. Time better spent perhaps on getting them back to profitability and selling more mass-market cars but still very exciting ones.

Here’s what I would recommend NML to sell in the Philippines, and my fearless prediction inset of how many units they can sell of these annually: the Cube (500 units), Altima (500 units), Maxima (200 units), Juke (500 units), XTerra (100 units), Pathfinder (100 units) and hopefully and eventually, yes the 370Z and the R35 GTR (100 units each). Add to that the excellent Almera (and they should sell the hatchback version too, 1,000 units).

Why these cars? These are the most popular mass-market Nissans available worldwide that appeal to the young, upwardly mobile and aggressive, spendy types. Nissan dug its own hole by focusing on cheap, affordable, fuel-efficient cars. There’s nothing wrong with that, but it left Nissan with no aspirational model that mass-market Nissan buyers could move up to once they had the resources available. The result? They buy from different brands.

Nissan can’t compete on prices and fuel efficiency tests alone. Nissan needs a united front under a strong leadership, with excellent products. Many of the great car executives in history (Lee Iacocca, Ghosn, Akio Toyoda, Ferdinand Piech to name a few) have all said that there’s no problem a car company can’t solve by releasing exciting products. NML, the ball is in your court.

As for the other rumors? I’ll get back to you on that.