Open Letter to Nissan II - Improving the Value of the GT-R in North America
Posted 12 June 2012 - 11:58 AM
In late 2010, I presented an Open Letter to Nissan outlining the key challenges that the GT-R community faced at the time. Since then, a substantial amount of time has passed and the GT-R market has grown, in the process experiencing a number of changes. Despite this growth and the changes seen, a number of significant issues remain and additionally, new questions and concerns have risen.
This Open Letter continues the dialog started in the first, updating it for the major challenges that are faced today and focusing on the actual issues that GT-R owners and prospective owners continue to have. The ultimate goal remains the same however: to detail the challenges that must be addressed to improve the ownership experience for the GT-R in its largest market.
Posted 12 June 2012 - 11:58 AM
NAGTROC arranges for the sale of more GT-Rs than any single Nissan dealership in the United States. NAGTROC does this in Nissan’s largest market for the GT-R without any formal program to do so. NAGTROC is also home to more GT-R owners than any other online community in the world and is recognized by more owners, operators, and companies in the GT-R industry than any website in the world. As a result, NAGTROC interacts with more individuals in the GT-R industry than anyone outside of Nissan - directly interfacing with customers, dealers, race teams, aftermarket manufacturers and retailers.
As the owner of NAGTROC, this privileged position has afforded me a unique perspective that many industry insiders do not have. In turn, this has led to a number of observations and insights worthy of discussion and Nissan’s immediate attention.
Ten of the largest issues facing the North American GT-R community have been identified in this letter. These issues focus on improving key aspects of GT-R ownership and range from technical improvements and offerings to customer interaction management. Ultimately, all of these recommendations are aimed at improving the GT-R ownership experience.
Given that the purpose of this letter is to drive improvements within the GT-R market, detailed improvement recommendations accompany each identified issue. For completeness, I’ve also detailed the reasoning behind these recommended solutions.
Nissan will continue to be evaluated based on their performance in addressing the challenges and issues identified by the community. The purpose of this communication is to help Nissan see what cannot be captured in surveys and loosely worded questionnaires. The contents of this letter are driven by real feedback - a daily dialogue of real GT-R owners operating machines that they are passionate about.
Since NAGTROC is the GT-Rs largest supporting entity, it is my goal to improve GT-R sales and demand. If Nissan takes the opportunity, these recommendations will improve customer satisfaction and thereby increase demand and sales in its largest market for its flagship car.
I also view it as my responsibility as a GT-R owner and enthusiast to do everything that I can for the machine that I love and for those who share my passion. To that end, I will leverage my position to address the below issues in the aftermarket to the maximum extent possible.
In line with this, I present the following ten largest issues that North American GT-R owners face today.
Posted 12 June 2012 - 11:59 AM
1. North American GT-R Owners Need an Upgrade Program
- GT-R prices have increased nearly 40% in just over three years
- Nissan does not offer options to upgrade GT-Rs
- Customers are therefore forced to go aftermarket to find cost effective upgrades for their GT-Rs
- GT-R track packages offered overseas are not offered in North America
- Overseas track packages, even if offered in North America, do not address the single largest issue for those that track their GT-Rs: fluid temperature management
- The GT-R’s transmission is very complex, with many small clips and sensors that are prone to failure
- Nissan does not sell replacement transmission components, and transmissions are not inexpensive, accounting for approximately 15-30% of a total GT-R’s value
- Nissan’s customers face inappropriate levels of risk owning GT-Rs outside of warranty relative to its market rivals
- Failures are inconvenient and costly for GT-R owners
- Known failures that go unaddressed dampen customer satisfaction and the interest of prospective customers
- Owners are passionate about their GT-Rs. As a result, mechanical failures can become negative, emotional experiences
- Nissan needs to proactively communicate with its customers and do everything it can to ensure complete satisfaction
- Dealer knowledge with regard to the GT-R program is inconsistent and insufficient to deliver the quality of service that GT-R owners deserve and expect from Nissan
- Dealers are not well informed on GT-R issues and prepared to handle GT-R customers
- Prospective GT-R owners should be able to better understand the cars they’re buying
- Pre-Owned GT-R buyers should not face warranty uncertainties
- Although the JPY has been strengthening relative to the USD, this strength is unlikely to continue to the extent that it has in prior years
- It is becoming increasingly difficult to compete at higher price points given the GT-Rs current form and the current challenges that buyers face
- Further MSRP increases are likely to present significant risks to the GT-R program
- Too many dealers continue to engage in ethically questionable pricing practices
- Too many dealers sell out of allocation while other dealers sit on their GT-Rs, seeking to find buyers willing to spend large premiums above Nissan’s target pricing
- GT-R owners are justifiably concerned with Nissan’s current warranty policies
- GT-R service experiences can be unnecessarily negative for GT-R owners due to Nissan’s history with regards to handling warranty claims
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Posted 12 June 2012 - 11:59 AM
Mizuno-san was correct when he said that the GT-R should evolve for its owner like a lover - enthusiasts want their cars to evolve with them. Especially GT-R owners. The problem is, North American GT-R owners don’t have a cost effective, value-added way to upgrade their GT-Rs. This is particularly true for 2009-2010 GT-R owners whose only easy, viable option with Nissan is to spend $50,000 or more to upgrade to a newer GT-R.
In the Community’s Words
“On the one hand Nissan is saying they believe in this whole "complete-package" concept but then they pretty much drive all of us - with these nonsensical packages and pricing - to embrace the aftermarket when it comes to real performance upgrades.” ->
Nissan should implement a cost effective, value-added upgrade program for North American 2009-2011 GT-R owners.
There are many 2009-2011 GT-R owners who want to upgrade their cars. Unfortunately, the cost for many of them to upgrade to a 2013 is close to the value of the 2009 itself. This unusual pricing is a side effect of Y/Y price increases and increased up-market demand. While these are normally positive things for car owners, this paradigm as it relates to the GT-R market results in net negatives for early GT-R owners who want a newer platform as it becomes cost prohibitive for many to upgrade.
Nissan’s factory replacement parts catalogue features some of the 2012+ updates, but a vast majority of GT-R owners will not look to it to upgrade their cars. There are a number of reasons for this: First, not everyone is aware of what’s found in the factory parts catalogue. Second, not everything that customers want is listed or viable to install on an older GT-R. Third, only a select few have the knowledge and experience necessary to determine which components to purchase to realize the desired improvements. As a result, the only real options for anyone wishing to upgrade their GT-R is to buy a new GT-R, do nothing, or go aftermarket.
Given that the GT-R’s MSRP has risen nearly 40% in just a few years, buying a new GT-R won’t be a cost effective option for many. Those who want to upgrade but can’t or won't must therefore wait until the prices of these GT-Rs fall in the used market. Given the historically slow decline in preowned GT-R prices, those who are waiting to upgrade probably won’t be very optimistic on how or when that will happen. In the end, although these individuals have money that they’re willing to spend, there’s no option for them with Nissan.
The aftermarket becomes the only viable option to upgrade a GT-R. This is what most who want to upgrade end up doing. While a significant number of GT-R owners have already done so, most of these owners haven’t done anything extreme and have only taken small steps. A vast majority haven’t pulled their engines or transmissions or even modified their turbos. They only want to update and improve their current setup. But it’s so valuable to them that they do so risking losing their entire warranty with Nissan. Nissan may not be happy with the route they’ve taken, and may console itself by the fact that these owners have written off their warranties, reducing the GT-R program’s net liability, but that perspective is not beneficial to anyone, least of all Nissan. The reality is that these owners came into GT-R ownership with their wallets open and, not finding any options from Nissan, went elsewhere.
For those who are unwilling to chance their warranties, they are left with no options but to swallow their desire to consume the fullest potential of the GT-R. Again, this is something Nissan may be satisfied with but these owners are not having the best experience possible. Many of these GT-R owners are willing to pay to upgrade, but Nissan seems uninterested in generating more business beyond the initial purchase.
Nissan should offer its customers upgrade options. There are a number of reasons for this: First, it would significantly improve customer satisfaction. Not only is this something customers want but it’s also value added and reflects well on Nissan’s genuine desire to foster the passion that is so unique to the GT-R community. Second, such a program- if properly executed- is likely to make money for the GT-R program and by extension, the corporation. Third, it would help maintain the value of all GT-Rs as customers become more confident in Nissan’s commitment to offering the best ownership experience possible. Fourth, it would receive significant positive exposure in the greater automotive community. This exposure and greater enthusiast community appeal is extremely powerful and will only serve to aid in the sale of many more GT-Rs. As the owner of NAGTROC, I have been priveledged to see this dynamic at work - even with all of the ‘ills’ the program has faced. Note that this approach in providing upgrade options is significantly different from the existing aftermarket “tuner” model. Tuners focus on customization with the customer “fine tuning” their machine to their specific needs. The recommended approach is higher level and broader, and beneficial for all GT-Rs.
While there are different approaches that can be used to properly structure an upgrade package, it is important to understand that a poorly structured- or poorly priced- package will be as ineffective as not having a package at all - it won’t gain traction among GT-R owners and the underlying issue they (customers) face will remain. The solution is a package aimed squarely at improving the GT-R experience in ways that owners value. To that end, a common offering for 2009-11 GT-Rs along the following lines would be an example of a value added option for many:
- New engine map with 480->515hp rating
- Updated automatic mode transmission shift logic
- Static increased RPM launch control
- Updated ABS/VDC actuator and software threshold
- Composite front strut reinforcement bar
- Stiffer brake hoses (DBA specification)
- Upgraded dampers w/ improved control and comfort mode
- 2012 Carbon HVAC Panel
- Addt’l sound absorbing material installation
- New brake fluid
- Re-alignment to either street or track specification
- Navigation system mapping update
- iPod cable update and center console rerouting
- No warranty impact with regards to tracking and modification
Below $10,000 installed
Below $15,000 with Dark Nismo Club Sport Wheels and Dunlop Summer or A/S Tires
Wheels and software aside, if one were to estimate the cost of these components from Nissan’s parts catalogue, the total would be close to $10,000. Given Nissan’s actual cost is less than Nissan’s dealer list prices, such a program should be very achievable for Nissan. And since customers can’t implement the software changes on their own in the same fashion, with the same level of certainty and reliability that Nissan can, the value of this package to the customer is very high - particularly in this price range. Even if one were to include wheels, the value remains exceptional and the proposition should still be doable for Nissan: Given that Ray’s offers GT-R wheels for $5,000-$6,000 retail, it doesn’t make sense that Nissan is pricing standard GT-R wheels at $8,000+. Nissan’s cost is clearly substantially less and it makes sense to offer wheels to customers at an attractive price if they are purchasing this package.
Taking a closer look at this example package, an upgrade along these lines improves all aspects of the GT-R. From a powertrain perspective, a 35hp+ increase is not trivial. It would come close to splitting the difference to the 2013’s power level and be very noticeable in daily driving, particularly with an improvement in mid range torque. Just as valuable for many would be an improved launch control that’s more consistent and aggressive - again, bringing it closer to 2012-2013 models. From a chassis perspective, an improvement in strut reinforcement and dampers will improve driving feel and handling. Improvements in the transmission shift logic, brake hoses, and the dampers comfort mode will all work in concert to improve ride quality. Added sound absorbing materials will improve noise, vibration, and harshness. An updated iPod cable improves compatibility and convenience with the single most popular mobile device on the market while a map update is always value-added. The sum total of these modifications makes a GT-R a better GT-R. It not only improves performance in ideal conditions, but in all conditions. It makes the GT-R more enjoyable and more comfortable to drive. There is no compromise in seasonality and if anything, offering a second set of wheels for a reasonable cost gives buyers an option for mounting an alternative set of tires to better suite their climate and driving needs.
This is great value for money. The only alternative for buyers would be to go aftermarket, in which case not only is the required cost going to be higher to meet these same objectives, but owners risk losing their warranties. At the end of the day, this dramatically improves owner’s satisfaction and the owner’s experience. A public announcement along these lines brings attention to Nissan and puts the GT-R back in the media. It buys quality advertising exposure for no real additional cost.
There are also other benefits to this program. If Nissan positions itself such that its customers believe that Nissan is standing behind their product and are dedicated to it, Nissan will receive fair consideration from owners and their families when it comes time to consider new purchases.
Some may believe that such a program would be of limited value to Nissan as it may discourage owners from upgrading to new GT-Rs. The reality is that an upgrade program such as that provided in this example would not negate the benefits of purchasing a new GT-R. In upgrading from a setup such as that described above to a 2013 GT-R, Nissan is still offering:
- A further 30+ hp with an improved powerband
- A new and refined transmission
- Further software and transmission operation improvements
- Improved standing start ability
- Numerous chassis reinforcements
- Improved suspension geometry
- Fully updated interior
- New Audio/Video system w/ an improved display, improved phone support, USB support, Navigation, Weather, etc
- New design seats and for the Black Edition, Recaro seats
- Improved paint including optional blue color and added clear coat layers on all paints
- Revised exterior with improved factory aerodynamics
- Larger front brake rotors
- Eco mode + 2WD drive modes
- Auto on/off headlights
- Backup Camera
- New wheels
- New fluids, brakes, and other consumables
- A reset warranty period
- And more
This package will also improve the value proposition of all GT-Rs to the extent that those who are in the market and don’t buy new may consider buying pre-owned as an alternative. While Nissan may downplay the significance of that, those are sales that might not have existed otherwise and at the end of the day, every GT-R owner, whether the car was purchased new or not, is a Nissan customer.
An upgrade program also has an interesting side effect on the GT-R market. If one looks at the low end, 2009 GT-Rs have maintained their value fairly well. While that won’t last forever, it will likely continue for the next several months. If, over the course of the next year, Nissan were to introduce an upgrade program, prices on 2009s so equipped would increase. Given that the GT-R, unlike many cars, increases in value with quality modification, it’s likely that the increase in value for upgraded cars could be near full. In that case, the price on pre-owned 2009-10 GT-Rs may close toward that of 2011 GT-Rs with both seeing a reduced price gap to 2012s and even 2013s. At that point, someone evaluating a newer GT-R purchase may find value in buying a new one as well - it requires spending more money up front but this level of commitment from Nissan (to offer an upgrade for MY12s and MY13s in the future), and the resulting value decay curve, means that the cost over time is well contained. The once expensive-looking 2012/2013 are now, on a relative basis, much more attractive.
The recommended package isn’t the only option that Nissan has. Nissan can also offer basic software updates to customers at no cost or at nominal cost. Such updates could improve the transmission’s operating characteristics to improve drivability and standing start performance and consistency. This would be a real benefit for all GT-R owners. Other possible upgrade options include specific power upgrade packages, which can also be implemented and provided for very little cost.
Ultimately, a well planned and executed upgrade program allows Nissan to add revenue that it wouldn’t have otherwise had while at the same time satisfying customers, improving its brand name, and improving the value of its products - both used and new. It’s a win for everyone.
Posted 12 June 2012 - 11:59 AM
Although the GT-R is an anytime/anywhere car, the heart of its legend lies in its on track abilities. Yet in factory form, there are real limitations to the extent to which a GT-R’s performance can be comfortably extracted on track. Most significantly - it has been found that with many combinations of track/driver/weather conditions, GT-Rs cannot complete full 20-minute sessions on track. This limits the appeal of the GT-R and is also a point of dismay among experienced owners who enjoy tracking their cars. Above all else though, the legend that is the GT-R is undermined when its outstanding performance abilities cannot be fully utilized.
In the Community’s Words
“One of the bigger issues with the GTR is overheating. When you are driving on the track make sure you have your function screen on the MFD and keep an eye on your oil and tranny temperature. After about 3-4 hard laps you may need to bring the GTR in to allow the oils to cool, or if you have an aftermarket cooler you could probably lap longer. I am sure there are others that can be more informative than me, but this seems to be a major limit of the GTR. “ ->
Nissan should offer a reasonably priced track package that’s directly aimed at improving the on-track experience of the GT-R.
The value of improving the on-track abilities of the GT-R is not lost on Nissan Japan, who has historically built and promoted the use of the GT-R on track. Nor is it lost on Mizuno-san, who created the Spec V, Global MY12 Track Pack, and even the Japanese Club Track Edition GT-R. But while these are unique and interesting packages, they’re too limited and expensive in scope to truly benefit the platform in its largest market. More to the point, they don’t address the biggest issue that North Americans have when tracking their GT-Rs: Endurance. Something is needed for this market but these options won’t work.
Let's start by taking a step back and looking at Nissan’s most recent effort- the Track Pack - to try to understand, in clear terms, the disconnect between Nissan’s offerings and what North American GT-R owners value.
The Japanese track package is as follows:
Track Pack Base Package:
- Trackpack emblem on lower HVAC panel
- Black interior liner & High grip fabric for seats
- Carbon front spoiler w/ brake ducting
- Spec V Wheels
Track Pack Base Package with Suspension:
JPY1,470,000 or USD18,100 (+$10,600 from base)
Track Pack Base with Nismo Exhaust + Carbon Wing
JPY2,209,200 or USD27,250 (+$20,000 from base)
Track Pack Base with Suspension + Nismo Exhaust + Carbon Wing
JPY3,070,200 or USD37,870 (+$27,800 from base)
In the US, the MY13 GT-R Black Edition carries a +$9500 price premium over the Premium Edition GT-R and includes a composite rear spoiler, Recaro seats, Spec V wheels, and a darker interior.
Compared to the MY13 Black Edition, the Track Pack swaps the rear wing for front brake ducting and discounts the overall price by $2,000. Given that (1) the rear wing is worth more than $2,0000 difference in package prices, (2) the Track Pack doesn’t improve drivetrain temperatures and (3) the Track Pack is likely to be less attractive than the Black Edition inside and out, this package does not offer substantial value over the Black Edition for North American customers.
Drawing direct comparisons between the Black Edition and higher end, equivalently equipped, Track Pack GT-Rs isn’t easy. One would need to add the Nismo exhaust to the Track Pack in order to get the composite rear wing. That brings the total price to a $20,000 premium over the Black Edition. In other words, for $20,000 more than a Black Edition, one gets everything that a Black Edition has, with the additions of a Nismo exhaust, front brake cooling, and a fabric based blue interior. In comparison with other top tier products on the market, this is very little value for money, especially when one considers that this total track package costs nearly $30,000 above the price of an ordinary GT-R and still does not address the GT-R’s powertrain cooling issues.
North American GT-R owners considering these options are far more likely to either buy the Black Edition (if they want the wheels and composite wing) or buy the standard GT-R and go aftermarket for everything else. Based on current offerings, it’s likely that the latter route would result in a $10,000+ savings with no compromise in quality or performance.
When North American GT-R owners go that route, Nissan does not benefit and the resources spent on introducing the Track Pack to North America are wasted. Furthermore, the GT-R’s name becomes devalued in North America when the Track Pack not only fails to address the biggest limitation of the GT-R, but also fails to deliver aesthetic appeal. These realities are only compounded when the customer’s confusion with regards to effective and suitable upgrades is then factored in.
Nissan needs a different track package for the North American market.
A more attractive, value added track package for the North American market would include the following:
- Front spoiler w/ brake cooling
- Transmission & Engine cooling
- Carbon shift paddles
- SpecV Recaro Seats
- Optional: Club sport oriented dampers
Cooling and support elements are key to any track package offering for the GT-R as they allow GT-Rs to remain on track longer without compromising the life expectancies of the engine, transmission and other expensive components. With this package, brake life is also improved as temperatures become managed. Optional Club Sport dampers would improve on track performance. Combined, this gives GT-R owners a superior track experience as they are not only able to enjoy more performance from their GT-Rs, but they’re also able to benefit from added peace of mind and reduced operating costs due to longer consumable life. These simple components also give the GT-R massive track credibility among the most elite of drivers. This is a credibility that, until now, has been largely missing.
The other components recommended for this package - Spec V Recaros and carbon shift paddles are both functionally and aesthetically important. On the function side, the Spec V Recaros are not only lighter but very comfortable and more fitting for track settings. They’re also very aesthetically pleasing. Also on the aesthetic side, composite shift paddles give the GT-R a unique touch, not only separating it from Infinitis which share similar shift paddles, but also removing the magnesium interior contrast that many customers have explicitly noted as one of their key interior improvement recommendations.
A package such as this should be offered in full or in parts, on new GT-Rs and existing GT-Rs, and with competitive pricing. Based on estimated OE pricing for components, pricing in the $10,000 range on new GT-Rs and in the $15,000 range as a refit package for existing GT-Rs (summing all components ex-dampers), should find buyer interest while allowing Nissan to cover the cost of implementing the program.
Altogether, a competitively priced package along these lines offers a far more compelling option for GT-R owners than any track package offered to date. It improves the function and form of the GT-R and improves its appeal among a wider segment of enthusiasts. As with a Model Year upgrade package, a track package such as the one described here is likely to also get attention from the media. Media attention on its own is valuable. A well executed track package can challenge and in many instances, silence those who would criticize the GT-R’s track pedigree. There’s minimal downside in Nissan offering it as well. Costs can be well contained and it doesn’t limit Nissan’s options in the future. Should Nissan ever decide to pursue a Nur Spec R35, there are still a number of track and performance oriented upgrades that the community would find valuable.
Posted 12 June 2012 - 11:59 AM
Currently, a failure of any component within the GT-R’s GR6 transaxle requires complete transaxle replacement due to the fact that Nissan is not selling GR6 parts. This is a serious problem for anyone owning a GT-R that is not covered by Nissan’s powertrain warranty. As the GT-R gets older, that will represent an increasing number of GT-R owners. Nissan needs to have a service plan for these individuals. It is not acceptable for Nissan’s customers to be expected to assume a risk of 15-30% of the entire value of their car on minor malfunctions. Especially given the history of GR6 failures in the past.
In the Community’s Words
“The transmissions do appear to be the weak link with this car. My car had the transmission changed out at 7500 miles. It has almost 20K on it now and I have had no issues since, but then again it is used only as a DD. Since there have been a number of 2012 that have required a tranny swap, it appears that Nissan has done little if anything to address the GR6's weaknesses...In my opinion, the transmission would not be that much of an issue if Nissan would train and allow the local dealerships to repair them. However, they have elected not to do so. Doesn't seem to make a lot of economic sense to swap a $20K transmission out for a $5 seal failure. There are a number of shops that have developed the ability to repair them, and upgrade them with after market parts that address many of the GR6 weaknesses, but it is not cheap. It is however cheaper than paying out of pocket for a new tranny from Nissan after they void your warranty for any number of reasons.” ->
At a bare minimum, Nissan needs to open a catalog for GR6 internal components.
GT-R owners love their transmissions. The GR6 is truly exquisite in its ability to deliver drivability and performance - even under punishing conditions. It’s also proven itself to be robust and as many would argue, the GT-R’s single greatest asset.
But the reality is, the unit still suffers from significant flaws. Due to the GR6’s twin clutch technology, there’s a significant amount of technology in the form of actuators, sensors, and clips that are all required to perform flawlessly to make the transmission function - and that’s within the transmission itself. The GR6 also incorporates an all wheel drive system and differential into the complete transaxle. Should any component or subcomponent within any of these systems fail, there’s currently no fix. Nissan requires the entire transaxle to be replaced at a cost of $15,000-$20,000 after labor - even if the point of failure is a simple $5 part.
Due to this policy, GT-R owners are justifiably concerned on the risks they may be facing in owning a GT-R post-warranty. When one adds to this the fact that there have been more than a few seemingly random transmission failures historically - even in newer transmissions- the cause for community-wide concern becomes real.
GT-R owners are dealing with this in different ways. Some are hoping for the best, and hoping Nissan will stand by them, despite the alarming frequency of transmission failures. Some have pre-emptively sent their transmissions to aftermarket builders, to address weak points before problems arise and they are stranded somewhere. Some are keeping their GT-Rs so long as the cars are under warranty and intend on selling after the end of the warranty period. Finally, some are leaving the community having sold their GT-Rs altogether.
None of this is beneficial to Nissan or the GT-R.
It’s not a good thing if customers become nervous about the reliability of the product they’ve purchased - especially when they depend on that product for transportation. Nor is it a good thing if customers are paying other companies to fix that product before they use it. Quite obviously, it’s not good that some don’t want to keep their purchases post warranty - nevermind those that don’t want to keep their purchases at all. None of these situations are in any shape, form, or fashion beneficial to Nissan. Nissan should not allow its customers to view their purchases- Nissan products- in this way.
The bare-minimum solution is simple. If Nissan wants to continue its current policies, Nissan should offer GR6 internal components for separate sale. The parts can be sold such that a VIN is required for purchase, but they should be made available. This will alleviate the core of the issues that many have, even if it isn’t the best solution.
A better solution to this issue and the best way to put an end to GT-R transmission concerns is for Nissan to not only offer GR6 parts but also rebuild GR6s in house. To make this happen, Nissan would need to setup regional GR6 service centers where GR6s can be sent for rebuild.
Under a program where GR6s can be rebuilt regionally, Nissan will have a very efficient way of offering transmission servicing. This brings a number of program benefits: First, Nissan no longer needs to completely replace failed transmissions. Nissan can instead be sent to regional service centers which can stock and repair transmissions. This offers Nissan substantial cost savings and saves GT-R owners significant time in service work. Second, in cases where warranty claims are denied or where GT-R owners have issues post-warranty, Nissan’s customers have- via local dealers- reasonably priced options for repair that do not exist today. This removes the bulk of the negativity from customers’ experiences when they have GR6s fail under circumstances that are not covered under warranty. It also gives Nissan an opportunity to increase revenue by offering value-added services to customers. Third, those who extensively track or race GT-Rs are provided with a reliable, nationwide, maintenance and service support network. Finally, because the program is region based, Nissan’s costs are contained. Nissan need not train every GT-R dealer in North America on GR6 service. Fewer than a dozen of the approximately 700 GT-R certified dealers need to be trained.
The end results of such a program will eliminate one of the biggest issues that afflict the GT-R today. Serious efforts on this front also have the potential to preserve the value of all GT-Rs on the market and even reverse the bulk of the negative perception that the GT-R holds from so many in the sports car community.
Posted 12 June 2012 - 11:59 AM
The GT-R community knows when it sees common issues. GT-R Owners talk about them at every opportunity - at GT-R meets, in informal discussions and most commonly on NAGTROC. If issues go without being addressed, owners become unhappy and more importantly, the brand’s perceived quality suffers. Over time, they become deterrents to buying a GT-R and, in the end, unresolved issues may encourage owners to sell their GT-Rs.
In the Community’s Words
“I HAVE A 09 WITH 14K MILES, AND YES THE ABS CONTROLLER IS NOT COVERED BY THE WARRANTY. A FRIEND OWNS THE DEALERSHIP AND ITS CORPORATE THAT WILL NOT PAY THEM AND OR COVER. ITS COMPLETE BULLS#@!!. I AM THE 5TH GT-R IN THE DEALERSHIP WITH THE SAME PROBLEM. NOW THE SAD PART, MY CAR HAS BEEN IN THE DEALERSHIP FOR 11 DAYS AND THEY CAN NOT GET THE ABS CONTROLLER, THEY SAY ITS A PROPRIETARY PART AND WE CANT GET AN ANSWER.” ->
Going forward, the proactive ways that Nissan addressed common instrument cluster, steering lock mechanism, and evaporative emissions system failures should apply to other components that see unacceptably high rates of failure.
Nissan’s customers don’t want to experience GT-R system malfunctions if they can be prevented. There are a number of reasons why:
- Inconvenience - Failures are inconvenient. At best, failures become unplanned trips to dealerships. This takes time and imposes hardships on customers.
- Cost - When things go wrong in unexpected ways, there’s often a cost penalty. Even if the failure is repairable under warranty, it might mean that the customer can’t make a meeting which may results in a business cost. Or the customer may have to plan their entire day/week differently. Depending on the issue, the customer may also need to find alternative transportation, food, or housing. While Nissan might compensate customers for some expenses under warranty, the customer must initially front the cost. This is a best case scenario. Post warranty the picture changes dramatically. If known issues aren’t addressed, they become a significant financial liability and a deterrent to GT-R ownership.
- Safety - Cars are depended on for safe transportation. A GT-R failure could leave the driver and his or her family stranded somewhere that is- or may become- unsafe. Other component failures could impact the operation of the car such that the car’s performance and capability is reduced in an unpredictable fashion. At a minimum this is undesirable. An unsafe car will not be driven. Nissan should not allow its customers to believe that Nissan's cars are in any way unreliable in their behavior much less unsafe.
- Uncertainty - If a customer believes that he or she may experience a failure, uncertainty is introduced into their ownership experience. He or she might hope the failure will happen at a convenient moment where the cost and safety ramifications are minimal... but the reality is that this leaves an unknown - will the failure occur on that one important vacation trip? Or will it happen right after warranty ends? What will the dealership experience be like? Will he or she be blamed for the failure? This is not the type of ownership experience that Nissan should offer.
- Identity - While the GT-R is a legendary car, it can make its owner’s life difficult if it’s in a constant state of repair. Eventually, the GT-R- the owner’s purchase decision- comes into question which detracts from the overall ownership experience.
A few examples of common issues that persist are transmission issues leading to failure (2009-2012s), idle drivetrain rattle (across all GT-Rs), headlight sealing issues (2009-2012s), ABS/VDC actuator failures (2009s+?), boost cuts under throttle (2012+), and transmission gear shift peeling (2009-2010s). Nissan should make it a top priority to see to it that issues such as these are addressed in a definitive fashion, and at no cost to the customer, such that they are no longer outstanding concerns for GT-R owners.
No car on the market today is free of issues, and Nissan is not being judged by the issues that afflict GT-Rs. It’s the way that Nissan has been handling the issues- particularly the known ones- that has been such a significant source of concern. Should Nissan do what’s right and offer its customers proactive, complimentary, fixes for common issues, GT-R owners will appreciate the effort. Notifying customers of vehicle updates and component fixes, even if it happens more often than the customer might prefer, is far superior to waiting for a “random” failure. It also inspires confidence in a purchase decision and as such, is key to ensuring a quality GT-R ownership experience.
Posted 12 June 2012 - 12:00 PM
Owners are passionate about their GT-Rs. It’s not a minor affair when GT-Rs go in for warranty service or even regular maintenance. For many, it’s like having a sick child. These are serious times and critical opportunities for Nissan to ensure that its customers are as happy as possible. All too often, the ball is dropped during this crucial time, and customers are left with negative feelings toward Nissan and Nissan’s dealers due to situations that are easily preventable.
In the Community’s Words
“it took them over 2 months to warranty my headlights that were filled with water stains inside (only 4k miles on my car at the time). I called the GT-R hotline no less than 10 times to deal with it so I've never had to call a car company so many times for something simple. Even showing them I owned two GT-R's did nothing for me so I think this will be THE only Nissan I would ever buy.” ->
Nissan should closely interface with its dealer network. Dealers should be made aware of known issues so they can quickly provide fast and efficient service. In instances where required warranty work involves key components of the car - such as black listed items (ABS/VDC modules, transmissions, etc) - or in cases where work performed requires more than a couple of days downtime, extensive cost or any other out of the norm circumstance- Nissan should proactively reach out to the customer to begin a dialogue above and beyond the dealer’s communication. Post service, Nissan should also follow with the customer up to ensure complete satisfaction.
People don’t buy GT-Rs for pure utility. They buy them out of passion. GT-R ownership is therefore, to a large degree, emotional. When things go wrong, those emotions are thrown up for grabs. If Nissan doesn’t claim them and ensure that everything is in order, it’s possible that the customer will have a very negative experience. When that happens, Nissan risks permanently losing them as customers. As a result, it's important that Nissan keeps track of its customers and engages them regularly, ensuring that GT-R related customer service is reflective of the brand.
Starting from the beginning, Nissan should be plugged in to what its dealer network is doing. If a GT-R goes down somewhere and a tow truck is called via the GT-R hotline, Nissan North America should know. If a GT-R comes into a dealership with a problem that will take more than a few days to resolve, Nissan North America should know. If a dealer identifies a failed part on a GT-R that is expensive, hard to replace, or blacklisted, Nissan North America should know. In all of these instances, Nissan North America should take advantage of the situation to reach out to the customer.
Before calling the customer, Nissan should do its homework. During this phase, Nissan should pull data from its own call center and from the dealership as needed to piece together the story behind the issue at hand. Once Nissan has that information together, the call to the GT-R owner should be made.
A typical call to a customer should begin with the Nissan representative identifying himself or herself as being from Nissan / Nissan Corporate in Tennessee and explaining that they regretfully understand the customer has had an issue with his or her GT-R. The Nissan representative should then let the customer know that they’ve been following the situation and are working with the dealer to make sure that everything is handled well. The Nissan representative should then state that he or she would also like to touch bases with the customer to see if there were any concerns or questions that the customer had. This sort of opening to a conversation does a few things: first, it clarifies the identity of the caller. When a customer hears that the manufacturer is calling them, they will immediately become appreciative. It’s a fundamentally different conversation than speaking with a dealer. The second thing it does is it tells the customer that Nissan cares. Customers that receive calls from Nissan out of the blue regarding technical issues and service will believe that they matter: why else would Nissan, a multi billion dollar company, follow their car and their experiences? The third thing it will do is establish respect. By Nissan asking to speak with the customer and taking a positive, constructive, customer-focused approach, the customer will not only appreciate the effort but respect it. Combined, this sets as positive of a stage for dialogue as possible. It allows Nissan to find out how the customer is doing, confirm that the customer is being taken care of properly, and provide the customer with any information that he or she may desire. During a call of this nature, Nissan may find out for example that the customer hadn’t been informed of the nature of the failure, or that the approximate ETA on a replacement part hadn’t been relayed, or that the owner hadn’t been given a loaner. It’s to Nissan’s advantage to find this out. Customers will be happy to share what they know and in turn, it will give Nissan an opportunity to improve the ownership experience in a way that they could not have done otherwise.
This process may sound challenging but GT-R owners are passionate individuals. They will appreciate the gesture and, even in a frustrating experience, will find it valuable. More importantly, if a situation is going wrong for a customer, Nissan will be able to do something about it before they lose that customer forever.
A policy along these lines would allow Nissan to go great lengths to satisfy its customers. It would give the GT-R an edge over its pricier competition in the $75,000-150,000 segment. It also has the power to give Nissan an edge in other market segments - for example, GT-R owners considering an Altima over a Camry for their child. Making a customer happy helps decisions like that - even if the Altima program is not the GT-R program. But there’s more that’s possible.
Longer term, Nissan has the opportunity to make its customers feel truly special.
It’s not complex or expensive to do. Nissan already has the tools in place. It could be as simple as a phone call as described above. Or it could involve using Nissan’s social network to actually interact with their customers.
In general, customers are not acknowledged by car manufaturers. If Nissan were to have an event and tag GT-R owners and their cars, it has a large effect on the minds of customers and customers networked friends. It becomes very significant when Nissan itself is promoting individual GT-R owners. Husbands and wives will pay attention. Kids will pay attention. It speaks volumes on the company’s commitment to- and passion for- its customers. The man that’s anxiously awaiting delivery will have his day made when he logs into facebook to see that Nissan tagged him in a picture of a GT-R at the port that’s on its way to him. His friends will be impressed. People will talk about it. The same can be said when an individual attends a GT-R Experience track day and Nissan posts a tagged wallpaper image of him or her driving. Kids will turn it into wallpapers on iPads - but the owner and all of his family and friends will all see that he got tagged in an amazing image. That is the kind of experience that makes people feel special. It makes them feel important.
The value of this is easily underestimated. If one spends enough time working at very high levels within companies it becomes easy to lose perspective. The reality is that this type of recognition matters to people. The GT-R may be purely analytical in form and existence, but the humans who drive it are not. In all of their purchases, from food to clothing to domicile, that is evident. Some even consider it a factor when purchasing multi million dollar aircraft - its the reason why the term “ramp presence” was coined. People, at all levels in society, want to feel important. GT-R owners are no different.
If Nissan entertains the egos of GT-R owners, these individuals will not stop giving them money.
Ultimately, this is about relationship building. A good partner makes you feel special and makes the world feel like a better, more enjoyable place. That’s the relationship Nissan should seek to build with its own customers.
Posted 12 June 2012 - 12:00 PM
GT-R customers and potential customers are leaving dealerships with questions they shouldn’t have. It’s inexcusable that GT-R dealers aren’t better informed on topics such as GT-R specifications, operating guidelines, configuration options, common issues, warranty policies, and maintenance & service recommendations. Additionally, many dealers continue to struggle with handling GT-R customers. This makes it unnecessarily challenging for them to sell GT-Rs and further dampens customers’ dealership experiences.
In the Community’s Words
“Most Nissan dealers don't know how to handle a machine or a client of this caliber. It's a frustrating experience from purchasing to routine maintenance of the car. I sold my 2010 GT-R recently and I miss the car very much but not the stupid dealers.” ->
Nissan should educate and re-educate its dealers on the GT-R. Dealers should be given guidance on how to handle the GT-R and potential GT-R owners and current owners. This training should not be a single event and instead be a process of continuous improvement. Data from customer feedback (easily gained from Nissan talking with the customer - see issue #5) should be used to help dealers focus on weak areas. Also, dealers should be given additional GT-R information to show and share with customers.
Ideally Mizuno-san could have end-to-end control of the GT-R experience, from design to construction, shipment, sale, maintenance, and ultimately recovery/resale. In North America this can’t happen however, and Nissan Japan is dependent on Nissan North America and its dealer network to sell the GT-R. Unfortunately for Mizuno-san, no matter what he sends overseas, the reality is that the core of the ownership experience will lie in the purchase and maintenance experience - which comes from Nissan’s dealer network and not Nissan itself. While some dealers already offer exemplary service, many do not, and this has a subsequent negative effect on the brand. It undermines every dollar spent and hour allocated on the GT-R by Nissan Japan and Nissan North America. Nissan’s dealer network needs to do a better job in offering a superior purchase and ownership experience.
In fairness to dealers, many don’t choose to find themselves in this position. They want to sell the GT-R but, despite training and some posters and signs, have no experience and means with which they can understand and interact with customers. As a result, it’s difficult for them to offer customers an exceptional experience.
To address these issues, dealers need to be provided with the following:
- GT-R Experience - Dealers need to spend a substantial amount of time with the GT-R. They need to understand what it was built for. They need to understand how it operates. They need to know what it’s like to drive it both on the street and on the track.
- Ongoing Training - Dealers need to understand the GT-R from the standpoint of the customer. As Nissan gives them opportunities to experience the GT-R, it is important that training continues for them to keep the material they are learning in perspective. This training should be inclusive of updates regarding ongoing issues among GT-Rs and how to interact with GT-R customers. The training process should incorporate feedback as well, as it’s important for dealers to provide Nissan with insight into their experiences and challenges.
- Sales Materials - Dealers should be provided with improved sales materials to assist with GT-R sales. The materials should cover topics ranging from GT-R configurations (including examples such as tire options) to maintenance variations in support various driving possibilities (e.g. track maintenance intervals).
Posted 12 June 2012 - 12:00 PM
Previously I suggested that Nissan implement a pre-owned GT-R certification program. While I still believe that to be the optimal idea, an assessment program may work as well: it would require less resources while still addressing the core issues at hand.
Many preowned GT-R buyers don’t know what to look for in purchasing a GT-R. They don’t know if the GT-R they’re looking at has been well maintained and if it’s under warranty. Unfortunately, many of these individuals later make GT-R purchases only to find out that the car purchased may not be under warranty due to previous modification that they were unaware of. This leads to a subpar ownership experience and underscores fears that threaten to dampen demand for pre-owned GT-Rs.
In the Community’s Words
“As i was getting ready to sign the papers the GTR tech said the car had a tune on it and the ECU was "encrypted". I then sat down with the dealer and said that their tech just told me the car had a tune and the factory warranty was void. He said no thats not the case, which i argued and he said that he would include an extended warranty with the car because it would cover the car even if it was modified. I took his word, signed the papers and took the car. Later I called the GTR line and asked just to be sure and they said that the extended warranty is subject to the same restrictions as a factory warranty. Hence the car is not warrantied if Nissan feels the tune and exhaust are the cause. Not what I was sold on.” ->
All pre-owned GT-Rs should be eligible to receive a simple assessment. In this assessment, Nissan should employ existing training and technologies already implemented in the GT-R to disclose everything they can about the GT-R in question.
GT-Rs have operational restrictions and carry unique maintenance requirements that must be met for GT-Rs to be kept healthy and for their warranties to remain intact. Many potential buyers know this, but don’t have a good way of knowing whether the pre-owned GT-Rs they’re interested in are in good condition. As a result, they will be hesitant to purchase GT-Rs or may decline to make purchases altogether. For those that do buy GT-Rs, concerns may persist even post-purchase. None of this is a benefit for the GT-R brand - Nissan’s customers should not have legitimate pre-purchase and persisting post-purchase concerns. GT-R buyers should be able to know whether their car is in good condition and under warranty before purchase. Post purchase, they should not be left to worry about an otherwise reliable GT-R. And above all else, they should definitely not be caught by surprise with denied warranty claims due to modifications they didn’t know about.
To address this, Nissan should provide assessments on pre-owned GT-Rs. Doing so in an efficient fashion will squarely address these concerns and not only improve the ownership experience for pre-owned GT-R buyers but also help maintain demand in the pre-owned market. This, in turn, creates value for every GT-R owner and for Nissan itself. Indeed, anyone in the market for a pre-owned GT-R is a potential GT-R owner and therefore a potential Nissan customer. Nissan should treat them accordingly.
A proper GT-R assessment should, at a minimum, encompass the following:
- A statement of mileage and known service & maintenance history
- An evaluation of flickr data to show general driving patterns on the car and whether the car was maintained as required given those driving patterns
- An evaluation of flickr data to indicate whether the car had been modified to run higher than factory power levels and in turn, the extent of risk of a “causal” denial of a warranty claim
- An evaluation of the physical conditions of the car
- A verification of correct steering and suspension geometry
- A verification of the proper function of all standard features
- A road test sign off by a certified GT-R tech
To be clear, using this assessment to alienate GT-Rs that have been modified or seen track use is a net negative to the GT-R program. It’s not to anyone’s benefit if modified GT-Rs or GT-Rs that have seen occasional track days become significantly devalued. GT-R owners don’t benefit- many of their cars lose value and the thought of tracking their cars to experience the true performance that they were once sold on becomes less attractive. Nissan doesn’t benefit either - the GT-R brand doesn’t become more valuable if Nissan’s own customers and prospective customers believe that a GT-R is unable to retain its quality after having seen a track. And it doesn’t help prospective GT-R owners. How do they view events such as the 2013 GT-R experience if there’s an implicit message from Nissan that the GT-R should not be tracked? What will they do with their GT-Rs even if they purchase them? And what is their ownership experience likely to be like? It’s hard to sell an airplane to buyers who don’t believe that plane can be maintained to safely fly to specification for many years. By the same token, it’s very important that Nissan sends the correct message to its customers and potential customers on what a GT-R is capable of and that maintenance, in addition to operation, is key to long term reliability.
If done correctly an assessment program is a great opportunity for Nissan. As the first party source, Nissan can directly impact the market and the market’s view of its product. If Nissan wants the world to believe that the GT-R offers drivers a race car experience that one can consume every day - on the track or street, without concern - then this is the path to do it.
If executed well, this program will improve customer confidence in GT-R ownership and help support high resale values for GT-Rs even after the year on year increases in MSRP slow.
Posted 12 June 2012 - 12:00 PM
Increases in the MSRP of the USDM GT-R have been understandable over the last few model years of production. However, the argument to continue to increase the GT-R’s MSRP has progressively become weaker. If Nissan continues to increase its prices, it will expose the GT-R program to new risks that are likely to outweigh the benefits of increased revenue from initial GT-R sales.
In the Community’s Words
“In theory, the interplay between supply and demand should result in efficient price discovery. But has it? The reason for skepticism is that economy of scale should result in superior products at reduced prices. But volume is shrinking so economy of scale is lost. Product is improving but prices are skyrocketing. It may be ok from a halo car perspective, and clearly the gtr has achieved that status, but I feel an opportunity has been missed. Namely to beat Porsche at their own game. Nissan have made a car that is a better value for the money, which is why I bought it, but after a great opportunity to achieve just that, I seriously wonder if they can sustain the game. In the US market at least, the boorish behavior of many franchises, aided and abetted from on high, serves as a cultural drag on the otherwise stellar trajectory of Mizuno and team's magnificent creation. I can't help but think that if the corporate stiffs had the intelligence and integrity of the engineering team that the outcome in terms of sales would be notably different. Maybe I am delusional, but that's my belief.” ->
Nissan should slow the rate of MSRP increases on the GT-R and instead focus its efforts on improving the ownership experience and offering customers the products and services they desire. In the process this will improve overall GT-R demand, unit sales, and revenue per customer - for both new and existing GT-R owners - in a way that has the potential to bring program revenue to all time highs.
When the GT-R first came out in 2008, it carried an MSRP of roughly $69,000 and $72,000 for base and premium trims respectively. At the beginning of the pre-order announcement, I contacted approximately 100 dealers in the Southern, SouthEastern, and Eastern United States to determine the mean asking price of the GT-R. At the time it hovered near MSRP + $18,000. That translated to dealer asking prices of roughly $90,000. Although I never knew what the actual transaction prices were, anecdotal reports suggested that a majority of sales were done in the +$5,000 to +10,000 range, with a significant number of sales going higher. Most interestingly though, this was not occurring in the most expensive regions of the US. Asking prices in the California and New York regions were significantly higher.
In this context alone, it made sense that Nissan raise the MSRP on the GT-R. The fact that dealers were asking significantly more than MSRP on average was hurting not only long term sales prospects and resale value, but also buying experiences. If the market valued the GT-R at $5,000-10,000 above then-current pricing, Nissan should have taken its cut of that money, not dealers.
At the same time that the GT-R preorder program started, the Japanese Yen began gaining significant strength against the US dollar. During the first month of preorders alone, the Yen strengthened more than 8%, marking a 12% increase from its level at the time that Nissan announced US GT-R pricing, and in the process hitting a 12 year high.
Given the reluctance of dealers to sell closer to MSRP and unexpectedly adverse movements in the Yen, it made sense that Nissan immediately increase the price of the GT-R - even if the Yen would see some recovery prior to GT-R deliveries. The reality was that as GT-R deliveries started, Nissan was losing on four fronts: (1) economic conditions were worsening- particularly in the automotive sector (2) GT-R sales were slowing (3) dealers were asking too much money amid strong customer interest, and (4) although the Yen had recovered somewhat- economic headwinds and recent, sharp currency movements meant that its future was uncertain.
Following the mid year MY09 increase in MSRP, sales slowed but did not collapse. Meanwhile, over time, the yen continued to get stronger. With overall conditions largely remaining the same, Nissan continued to increase the GT-R’s MSRP over the following. The following chart, which shows the MSRP of the GT-R in comparison with the Yen/Dollar exchange rate, paints this picture:
While the causes of the slowdown in sales after the MY09 price increase can be debated, it can be easily argued that due to superior product design, demand has been noticeably price inelastic. That is to say, despite dramatic price increases, demand has persisted. The chart below illustrates this, where demand has increased despite continued increases in the GT-R’s MSRP:
Following the US MY12 GT-R update, demand for the car increased significantly - returning to a point not seen since the GT-R’s initial release three years prior. Unfortunately, Japan experienced a tragic earthquake in March of 2011. The catastrophic damage and loss of production that resulted included many GT-Rs that would have been sold in the following 2-3 months. This caused GT-R deliveries and therefore sales to slow.
Further dampening demand was the fact that Nissan North America informed customers that GT-R orders, particularly for Black Edition GT-Rs, had been cancelled and might not ever be replaced. This was a strategic error. The impression left on buyers led more than a few would-be GT-R owners to buy other cars. Given the low inventory of GT-Rs at the time, there were no real alternatives. Had Nissan instead communicated that the cars would still be built, and production was simply delayed, the customer reaction would have been different. Although it’s hard to render a judgment on a company in such a tragic situation, the reality is, corporations the size of Nissan are held to high standards and customers expect that risk management plans cater to a multitude of circumstances by containing a number of contingencies. At a minimum, customers expect clear communication and actions that confirm the brand quality in both good times and bad.
Toward the end of the MY12 production run, US demand remained although supply did not. While public data doesn't reflect a detailed picture of North American inventories, I can affirm that NAGTROC had interested GT-R buyers but lacked the ability to find GT-Rs for them. Had it not been for the Earthquake and the limited production run, at least 20% more GT-Rs would have been sold that year.
Starting with the introduction of the 2013 GT-R, the GT-R’s base price moved to exceed $95,000. Also, for the first time, a standard GT-R trim exceeded $100,000 with the Black Edition being priced at just above $106,000. Despite these substantial price increases, sales have not collapsed, as seen in the prior charts. What does this picture look like from the standpoint of the GT-R program as a whole? The following chart, which depicts Japanese eqivalent revenue from US sales (Monthly Sales * GT-R’s MSRP in spot Yen) roughly illustrates the story:
Viewing this chart, one can see that, had it not been for the Earthquake and demand miscalculation, the GT-R program would have been netting close to the same revenue that it had immediately following its release in early 2009. Worth noting is that this strength in revenue was found despite the fact that the Yen has been strengthening the entire time, climbing to post-WWII high, and despite the fact that the MSRP has risen to a point roughly 40% higher than it was just three years prior.
One should not expect this demand to remain should the GT-R’s price continues to increase. Given market and economic conditions, the GT-R program is at a point where the North American market benefits more from a stabilization in price and a shift toward focusing on customers than further MSRP increases.
The main reason why demand is unlikely to remain at higher price points lies in market expectations. Namely, GT-R buyers are starting to have higher expectations on the GT-R purchase and ownership experience, particularly as more GT-R buyers come from higher end competitors. This is resulting in buyers expecting much more from Nissan and Nissan’s dealers than is being currently delivered.
Another reason why demand will be difficult to maintain is that customers are fast expecting the GT-R to outperform other cars such as the GT3RS, ZR1, and Viper/ACR in all aspects. While the GT-R currently offers that capability, it has too many limitations to effectively and convincingly deliver on this in factory form, particularly as all of these cars are expecting significant platform (and performance) updates in the near future.
One of the biggest arguments in favor of continuing to increase the GT-R’s MSRP is to protect GT-R revenue from further movements in the Yen. However, it appears unlikely that the Yen will strengthen to become significantly stronger than the record highs recently seen. The Japanese Ministry of Finance, via the Bank of Japan, have been committed to limiting movements near recent highs. But even if the Yen did return to - or exceed - record highs, the effect should not be particularly adverse as Yen adjusted revenue per GT-R sold is at multi year highs:
At this point in time, a nominal increase in the GT-R's MSRP might, if Nissan is fortunate, improve revenue over the short term. But it’s not necessary and will make it very challenging to ensure that sales remain. And if those new owners aren’t satisfied, the net effect of the price increase will be markedly negative and Nissan will have driven itself into a hole. Sure, prior GT-R owners would have an improvement in resale value - but those prior GT-R owners will be even less likely to upgrade. And as the gap to Porsche products closes and the GT-R nears parity with other, once more expensive cars, many options will become attractive to prospective GT-R owners. At a minimum it becomes worth it for GT-R buyers to take a very close look at the alternatives. After all, if Nissan holds GT-R Experience Events and expects its own 2009-10 GT-R owners to have the capital to upgrade to 2013 GT-Rs, Nissan should definitely expect 2013 owners to be able to directly cross shop against Porsche and other manufacturers as the incremental price premium is far less. Making matters worse, by this point, Nissan would not be able to back down. Nissan would not be able to remove thousands from the GT-R’s MSRP to switch strategies.
The four challenges that led Nissan to continually increase MSRP are slowly fading: The balance of economic conditions is now aligning for the better not worse, with US car sales performing well. GT-R sales have been retained, despite higher prices and minimal added investment. Dealer prices- although still high- are in some areas finally adjusting. And the Yen/Dollar balance is now less likely to see the same degree of extreme strengthening that it did in 2008.
Clearly, with market conditions having changed, the aggregate risk profile is now asymmetric, arguing against continued increases in the GT-R’s MSRP. Indeed, it’s now better for Nissan to slow its price increases and focus on improving the customer experience to improve unit sales. Offering customers the products and services they want, to improve both revenue per customer and total revenue via sales, and maintaining the gap to more expensive cars in the segment is now becoming more valuable. Revenue per car sold- which is currently near record highs- will ensure that cash flow exceeds current levels as customer satisfaction and therefore sales, improves. Additionally, this strategy shift- combined with the implementation of new customer-oriented programs- will lead to a fundamental improvement in demand that offers protection from competitors while allowing Nissan to improve its product. All while assuming minimal risk and without sacrificing future strategic options. To be sure, the strategy of increasing the GT-Rs MSRP is now the riskier and less rewarding path forward.
A continuing increase in the GT-R’s MSRP will simply create an artificial boost in short term revenues. It’s a short sighted strategy that exposes the brand to risk from competitors in addition to constraining more robust paths. None of this is to say that the GT-R can’t compete at higher price points. It absolutely can. But as customer sentiment and market data indicates, this is not the optimal path to improving the GT-R market and maximizing profits. Nissan needs to instead focus on improving the GT-R and the fundamental GT-R ownership experience. From that point forward, improved sales numbers will follow and achievable upmarket opportunities will be presented. If Nissan does not do this, that opportunity will be lost.
Posted 12 June 2012 - 12:00 PM
Four years after release, some dealers continue to ask for prices above MSRP on GT-Rs. Meanwhile NAGTROC and its dealer network have repeatedly sold out of supply despite efforts that, to date, have not been reflective of potential.
In the Community’s Words
“SoCal is the absolute worst place to buy a GT-R.....I would start looking at other areas....waiting until later in the year may not help much either as dealers in that area are still asking outrageous prices for 2012's.....I would plan on a shipping budget of about a grand and you'll find a car much sooner.... “ ->
Ideally Nissan should eliminate the practice of dealers asking for prices above MSRP. Since that’s not in Nissan’s control, Nissan needs to focus its efforts on supplying dealers who are selling GT-Rs quickly and at MSRP and if possible, force dealers to work for customer business.
Nearly four years after the GT-R’s release, some dealers continue to charge above MSRP for the GT-R- despite the underlying price increasing nearly 40%. It’s clear that dealers are doing this to get what they can from customers and are not looking out for Nissan’s interests or even their own long term interests. Indeed, had dealers stayed closer to MSRP, it’s very probable that more GT-Rs would have been sold to date and dealers would have been able to enjoy more business opportunities overall.
In dealers’ defense, some may claim that they’re victims of a social dilemma: Due to the popularity and rarity of the GT-R, certain regions may find markups and above MSRP asking prices to be the norm. Few dealers in these regions will likely oppose these prices due to the fear that lowering prices will not only create a price battle but also fail to translate to additional sales. Although the underlying argument and logic behind this thinking is fundamentally flawed (see the details on issues #6 and #8 above), there’s a strong desire for dealers to maintain existing price points and hope to make money - even if the most probable outcome is a negative situation for everyone.
This is a problem for the broader GT-R community which is in need of getting more buyers into GT-Rs. This problem becomes magnified when other dealers sell out of GT-R allocations. For example, NAGTROC directly arranged for the sale of more than 25 GT-Rs in CY11. That occurred despite NAGTROC not having a formal program to do so - they were purely organic sales. Yet NAGTROC could have sold more - there was a limitation in supply: Many of the dealers we referred buyers to had no slots remaining, or did not have slots at the times we needed.
It is not beneficial for GT-Rs to sit on lots in some parts of the US, in wait of buyers willing to pay marked up prices, while other dealers run out of inventory. Indeed, it is a problem when real buyers ready to pay Nissan’s asking prices are left to go home empty handed.
The simplest way to address this issue is to limit GT-R allocations among dealers that don’t sell GT-Rs at an acceptable rate and utilize alternative channels to ensure that every dealer that needs GT-Rs can efficiently acquire them.
An even better solution would be for NAGTROC members to be able to order GT-Rs directly from Nissan. Such a process could permit members to assign delivery and transaction closing to a dealer of their choice. That way, dealers would have to compete with each other for GT-R business, incentivizing customer care. Additionally, dealers located in areas that typically see mark ups above MSRP are less likely to experience pressure to maintain unreasonably high prices. They would instead be forced to compete for their customers’ business. Finally, as this system positions GT-R owners as existing customers from the very first dealer conversations, dealers will have an easier time handling them and it is more likely that they will be taken as seriously as they should be.
In many regions, dealers are already asking near MSRP. This concept would have little impact on those parts of North America. However, in the select areas where asking prices above MSRP persist, a program such as that described above would change the entire picture and enable prices to revert to MSRP much quicker than they otherwise would. The customer experience is also likely to improve as dealers become more interested in satisfying customers.
Ultimately Nissan needs to do what it can to encourage fair competition among dealers and encourage the best GT-R purchase experience possible.
Posted 12 June 2012 - 12:01 PM
Disclaimer: I am not a lawyer. The comments and analysis made here are my opinion only and do not constitute legal advice in any capacity.
GT-R system malfunctions and the resulting service visits have been problematic for owners not only due to inconvenience but also due to Nissan’s history with regards to its warranty policies. In short, owners are justifiably concerned that Nissan may not support them in the event of warranty service, even though they’ve operated their GT-R as Nissan itself has advertised. Owners have also expressed concerns that Nissan may not abide by Federal Laws with regards to the handling of warranty claims. These concerns have not only led to a negative climate for current and prospective GT-R owners, but also led to real fears that have in some cases encouraged owners to sell their GT-Rs.
In the Community’s Words
Excerpts from a series posts pertaining to an incident requiring a dealership owner to make a higher appeal to have a warranty decision reversed: “So I got the call today and apparently they denied my warranty for two reasons - having a Cobb AP and for not using Nissan fluid. Supposed to speak with the district rep tomorrow about things and go from there. If anyone has any suggestions, I'm all ears. From what I gather, they don't even know what's wrong with the transmission... I'm not looking for a free ride, if the increase in power caused the malfunction.. then that's my fault. I agree with you there. What bothers me is that I'm just told it's denied because of a reflash and non oem fluid and not informed what component failed (if they know)... Spoke with the rep from Nissan...He tells me that my modifications caused significant damage to the vehicle, yet cannot elaborate on what the damage is or what component failed because he's in the car and doesn't have any paperwork with him. I ask him to call me back when he has it in front of him, he says no...Refuses to give me a report from Nissan engineers because they are internal documents...I asked him to prove that my modifications caused the damages, he told me to take them to court...I explained to him what the issue is and there's a TSB on my failure, he tells me that he's not a technical person and doesn't understand what I'm talking about. I asked him to send me up the ladder to someone who does know what they are talking about, he says no." ->
Nissan should revise its warranty policies. Nissan should approve warranty claims for known issues, regardless of whether a GT-R is modified or not. Nissan should also approve warranty failures for instances where modifications were not the cause of failure. Nissan should then make it clear that it’s OK to track the GT-R noncompetitively and communicate these policy changes to its customers.
GT-R owners and prospective owners continually express concerns with regards to Nissan’s warranty policy for the GT-R. Chief among the concerns is that the smallest modification to one part of the car- whether it’s a fluid used or component added - may void any and all warranty claims in the future, even on components that are completely unrelated.
Some in the GT-R community have believed these policies to run contrary to the US Federal Code of Law. Attempting to understand this idea, and starting with the definition of the Limited Warranty that Nissan includes with the GT-R, one finds the following in the US Federal Code of Law under Title 15 Section 2303, in what is commonly known as the Magnuson Moss warranty act:
(a) Full (statement of duration) or limited warranty
Any warrantor warranting a consumer product by means of a written
warranty shall clearly and conspicuously designate such warranty in
the following manner, unless exempted from doing so by the
Commission pursuant to subsection © of this section:
(1) If the written warranty meets the Federal minimum standards
for warranty set forth in section 2304 of this title, then it
shall be conspicuously designated a "full (statement of duration)
(2) If the written warranty does not meet the Federal minimum
standards for warranty set forth in section 2304 of this title,
then it shall be conspicuously designated a "limited warranty". US Code Title 15S 2303
As legally required, Nissan has declared the GT-R to be sold with a “Limited Warranty” which, when used as Nissan does, appears to mean that Nissan doesn’t have to meet Federal Warranty standards found in Section 2304 of the US Code. According to the Federal Trade Commission (FTC) this means that the GT-R’s warranty does not meet one or more of the following criteria, if you are Nissan:
- You do not limit the duration of implied warranties.
- You provide warranty service to anyone who owns the product during the warranty period; that is, you do not limit coverage to first purchasers.
- You provide warranty service free of charge, including such costs as returning the product or removing and reinstalling the product when necessary.
- You provide, at the consumer's choice, either a replacement or a full refund if, after a reasonable number of tries, you are unable to repair the product.
- You do not require consumers to perform any duty as a precondition for receiving service, except notifying you that service is needed, unless you can demonstrate that the duty is reasonable. FTC
( c ) No warrantor of a consumer product may condition his written or implied warranty of such product on the consumer’s using, in connection with such product, any article or service (other than article or service provided without charge under the terms of the warranty) which is identified by brand, trade, or corporate name; except that the prohibition of this subsection may be waived by the Commission if—
(1) the warrantor satisfies the Commission that the warranted product will function properly only if the article or service so identified is used in connection with the warranted product, and
(2) the Commission finds that such a waiver is in the public interest.
The Commission shall identify in the Federal Register, and permit public comment on, all applications for waiver of the prohibition of this subsection, and shall publish in the Federal Register its disposition of any such application, including the reasons therefor. US Code Title 15S 2302
The FTC has apparently clarified this in stating that:
Generally, tie-in sales provisions are not allowed. Such a provision would require a purchaser of the warranted product to buy an item or service from a particular company to use with the warranted product in order to be eligible to receive a remedy under the warranty. FTC
As a result of these laws and the apparent absence of an FTC waiver on this subject, it is my personal opinion that not only is it a violation of the US Code of Law for Nissan to make the GT-R’s limited warranty dependent on the use of Nissan specified fluids and products (that are not sold free of charge), but it also casts significant doubt on the legitimacy of warranties being voided on the sole basis of aftermarket products being used.
Nissan and Nissan’s legal team may have its own view of these laws. They may believe that it’s somehow beneficial to force GT-R owners to sign disclosures that, at a minimum, threaten the spirit of US law. I disagree.
The warranty laws in question were originally created to promote transparency on purchases and protect consumers. There’s no real benefit for Nissan to attempt to force consumers to yield what appear to be their legal rights. While it is true that most customers will find it more cost effective to fix failed components on their GT-Rs than go to court, others will find it even more cost effective to sell their GT-Rs altogether. Yet others may go to court where, depending on the specifics of the case, they may have a very strong chance of winning. In any scenario, this leads to a negative climate for the GT-R community and ultimately threatens overall GT-R sales. In the end, everyone loses.
To a large degree, this is what has been observed by many in the GT-R community. Nissan has taken an adversarial stance against its own customers, in the process damaging the reputation of the GT-R, depressing customer satisfaction, and creating a source of significant concern among potential GT-R owners. These individuals do not want to purchase a car with extensive warranty tie-in provisions, especially when the warranty tie in provisions prevent owners from maximizing the utility of the GT-R and addressing factory limitations that remain unaddressed by the manufacturer. This has all dampened GT-R demand.
While there is clear incentive for Nissan to be as circumspect as possible in the handling of warranty claims, there is no net benefit to implementing policies that run contrary to the spirit of the laws and ethical business in the markets in which Nissan operates.
Nissan needs new policies for handling warranty claims on modified GT-Rs. What’s the right thing to do?
- If a part fails due to a defect or has failed and is otherwise affected by a known issue that would similarly result in its failure, Nissan should cover the replacement of that part whether that GT-R is modified or not.
- If a part fails on a modified GT-R, and the failure is not related to any modification performed, Nissan should cover the replacement of that part, whether the GT-R is modified or not.
- If a part fails on a modified GT-R, and the failure may be due to a modification but Nissan genuinely isn’t sure, then Nissan should utilize its diagnostic tools, trouble shooting and procedures as its guide. In denying a claim, Nissan should be able to easily demonstrate to the customer how it came to that conclusion and decision not to approve the claim based on clear and compelling fact and without confusion or subjectivity. If Nissan does not yet have the methods to do so, Nissan needs to implement them so that it can better understand the issues that arise with its cars. In the interim, without being able to produce clear evidence that a modification is the cause of failure, Nissan should make the necessary repairs as a sub recommendation thereby cancelling any current or former precedent.
- If a part fails on a modified GT-R, the failure is not related to any known issue, and Nissan can construct a logical engineering-based argument that a modification likely caused the failure, then Nissan should not cover the warranty claim on the failed part. Nissan should also provide this explanation to the dealership and in turn, the customer, when denying the warranty claim.
By implementing these policies internally and communicating to GT-R owners that it’s OK to track their cars noncompetitively and informing them that Nissan’s approach on handling warranty claims will be modified, Nissan will earn massive respect from its customers and from the automotive community. It is a necessary, key step in reversing the damage done to Nissan’s reputation and the GT-R three years ago. It is also strongly beneficial in improving GT-R sales at higher price points as Nissan moves forward.
Posted 12 June 2012 - 12:01 PM
The ownership experience is key to the business of manufacturing and selling cars. All available avenues for Nissan North America to improve the ownership experience must be explored. When the ownership experience falters, owners drive their cars less. This in turn, nets the car less exposure in the public. Eventually, owners sell their cars, adding to downward pressures on demand. These owners then become less likely to speak positively on the car that they owned. Their family, friends, colleagues and acquaintances - even on the internet - become less likely to purchase the same vehicle. This reduces the effectiveness of every advertising dollar spent. It also exposes the manufacturer to competitive risk.
In the case of the GT-R, one of Nissan's biggest competitors is Porsche- the established icon and as many would argue, benchmark- in its segment. The GT-R’s self proclaimed competition is the 911 Turbo. By price point, its competition is the Carrera/S. The GT-R has, to date, been received very well by both the media and the public in comparison with both the 911 Turbo and Carrera S. Given that the public likes the GT-R as much as the 911, given that the GT-R outperforms the 911 in many areas and offers better real world use, and given that the GT-R has better resale value, further underscoring the cost advantage -how can the massive difference in sales between the two be explained? It is the ownership experience. In all other metrics, the GT-R is a very serious challenger to the 911. It has a different name but it offers better real world use, better performance, better practicality, and crucially for a brand in this segment, is extremely popular among car enthusiasts, particularly among younger groups.
Porsche has taken this threat seriously. They have a new competitor that not only offers better performance but also offers better practicality and, perhaps most scary of all, has already captured the minds and hearts of enthusiasts - particularly in younger segments who Porsche would someday like to sell 911s to. In making this recognition, Porsche has engaged in an aggressive strategy to protect themselves and their brand. Examples of this abound: Porsche has lengthened the 911 to improve interior space and usability. They’ve been making rapid, significant strides in improving performance. Porsche has also been marketing the daily usability and practicality of the 911 on an increasing basis. More recently, we’ve seen Porsche step up its acquisition of circuit tracks worldwide. Permit applications and declarations tell us that they intend on creating motorsport facilities for reasons other than internal testing. The direction Porsche is going in is clear. Whether or not anyone believes it is a coincidence that this happens following the GT-R, Porsche is clearly protecting itself and seeking to improve the experiences of all of its owners. Some may say that Porsche has the outright upper hand, but in a brand based on luxury, market perception is everything and loyalty will only take you so far. It’s a real problem for them if the public views the GT-R as the people’s supercar. They’ve traditionally been the alternative to Ferrari and Lamborghini. They cannot afford to take the risk of any additional competitors capturing enthusiasts and further dividing their market. Whether the threat is the now global GT-R, or another newcomer in the future, it makes sense for Porsche to invest into its own brand to protect itself. Porsche has not gotten to where it is today without adapting. Long term survival and success in this market is not attained by age, it is obtained by adaptation. That is how Porsche has survived, and they are not alone.
Nissan is not Porsche, nor does it need to be. Nissan needs only to do everything it can to position itself for the long term, around the platform and legend that it has already created and that enthusiasts worldwide recognize and love.
But the best part about the GT-R experience, and Nissan's greatest asset in the GT-R, is that it’s not just an experience for enthusiasts. It’s one for everyone. The GT-R, by nature, offers that level of appeal- something that it is physically and mechanically able to live up to. It is also, in turn, an experience for Nissan: the lessons learned can be fed back into the program in a process of self improvement. These lessons can then be applied to future GT-Rs and future projects within Nissan worldwide.
The picture is clear. Sales are slow, but market conditions are favorable and consumer recognition is high. Passion is strong. These are things that an advertising budget cannot buy. Nissan has a product on its hands that, if properly managed, can carve itself a permanent place in the most respected tier of automobiles around the globe.
Posted 12 June 2012 - 12:01 PM
NAGTROC is a committed organization. This is not being written on behalf of car enthusiasts, it is being written on behalf of paying customers, both present and future.
I understand that the car business is complex and challenging. It’s a sea fraught with legal issues, corporate challenges, politics, and personal egos. I have seen this in the GT-R community itself. Over time I’ve worked to eliminate it but, it will be a never ending process.
In 2010 I offered Nissan the opportunity to privately discuss the GT-R program. I continue to make that offer. It is my belief that while NAGTROC and Nissan play in different arenas, we are on the same team, seeking the same goals.
It is my hope that together, NAGTROC, Nissan Japan, and Nissan North America can improve market conditions for the GT-R and improve demand and the ownership experience above what many would argue possible.
Nissan's FY12 Progress Report - Open Letter to Nissan II
R35 GT-R Launch @ TMS07 - SpecV Launch "America Isn't Ready" - NAGTROC Visits Tochigi
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