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Nissan answers your questions

2008-02-25 10:44
Thank you for the opportunity to answer your readers? questions. The answers below reflect Wheels24's summary of the questions, but we request that you send the full list of questions to us to enable us to get back to any individual whose questions are not covered fully.

Editor's note: We will submit the questions and comments received to Nissan for further feedback.

Many agree that the Nissan brand and its public image in South Africa have improved dramatically, but what is next for the brand? Are there any details on plans to introduce Infiniti in South Africa, especially with the brand's launch across Europe starting this year?

Nissan worked hard in recent years to improve the Nissan brand and we are highly encouraged and motivated by the results. However, we still have some hard work ahead of us and need to take specific care in the passenger area of the market, specifically in the lower end of the market where value for money, affordability and acceptance by the younger generation is important.

With regards to Infiniti, careful planning, consideration and substantial investment will be required to compete against established luxury brands in South Africa. Infiniti will have to present a positive business case in terms of investment for both Nissan and dealers.

A study on Infiniti is on the cards, but first we need to achieve our goals that we have set for the Nissan brand - we have a clear strategy and are well on course to achieve this. So, for the medium term, Infiniti will remain a study and the other luxury brands can breathe easily for now.

Conversely, despite the addition of some really good new models, what is the deal with Nissan's resale value? There's great dissatisfaction with the accelerated rate of depreciation for your models from several readers. Could it be that practices of offering great discounts to help dealers move cars ahead of impending new model launches - as seen recently with the X-Trail - is in fact only hurting the consumer since these vehicles, in turn, are worth a fraction what people paid for them when the time comes to sell?

Also, why are after sales services and replacement parts so pricey, and what steps is Nissan SA taking to ensure its dealer staff delivers a consistently high level of service? This was found to be lacking in a range of responses received.

Resale Value is an industry issue, and without a doubt some brands/models perform better than others. Before we discuss Nissan, a brief summary of the industry-related reasons for this situation:

  • Price gap (new to used):
    After a period of steady price increases (due to exchange rate depreciation and inflation), the market enjoyed a period of improved economic conditions, low inflation and currency appreciation, which resulted in almost no or minimal increases in car pricing.

    In this latter period vehicles appeared to retain their value, but on the other hand the gap to the equivalent new vehicle was quite substantial and new vehicle price increases were heavily criticised.

    Currently, new vehicle prices are fairly stable and used vehicle prices have fallen to a similar gap (new to used) as was there before. Customers are influenced by this price gap - if the price of a used vehicle is almost the same as a new one - and it becomes a matter of supply & demand.

  • Discounting:
    This certainly contributes and many pages can be written on this, but to put it simply: our market had unprecedented growth for about three years, and the industry ordered lots of stock and increased production capacity.

    Then the National Credit Act and several increases in the interest rate resulted in a sudden turnabout in the market, going from huge optimism to a decline of almost 20% in private sales. This caused the entire industry to be overstocked which resulted in heavy discounting to move stock.

  • Rental participation:
    Volumes coming back from the rental companies into the used car market can also affect resale values. In terms of total sales, Nissan was the 3rd biggest brand in South Africa during 2007, however Nissan's participation in the rental market was less than half of either of the top 2 brands' rental volumes. Considering our market positioning, our rental participation was not out of line.

    Looking at Nissan more specifically:

  • First, in the high volume compact car and small SUV segments:
    According to the latest Auto Dealer's Guide there is a 3% difference in value retained between the high selling models in this segment (it means there is almost no significant difference between all these high selling models), and the Nissan Tiida is positioned in this high selling segment.

    Similarly, the X-Trail is within 3% of its main competitor. However, we acknowledge the dissatisfaction of customers and have already actively changed a number of business decisions and processes to ensure a better control of residual values. Some of these include processes to allow quicker reaction to market conditions and a different approach to rental business.

  • Parts pricing:
    We use research like the respected Kinsey Report to maintain a competitive position versus our competitors in the segments where we compete.

    In the 2007 Kinsey Report, our Tiida won the 2 main categories namely parts basket cost as percentage of retail sale price, as well as the lowest overall parts basket cost. Overall cost of ownership, which is the important consideration for our customers, is measured in terms of "cents per kilometer" versus our competitors, which is where we ultimately have to be competitive.

    Using these tools as well as customer & dealer feedback, we review parts pricing continuously. Although it is not possible to always be the cheapest in all segments, we aim to be competitive versus our main volume competitors.

  • Dealer service: Nissan believe that having top class dealer service levels is critical in the current and future environment. The industry uses an independent research company to measure sales and service at dealership levels.

    According to this research Nissan dealer service levels have improved substantially over the past few years, with Nissan ranked in the top group of OEMs for both the sales and service experience. This came about through substantial effort & investment by both Nissan SA and our dealers to get processes, skills & training in place.

    However, it is a fact that bad customer experiences still occur, and there are differences in, for example, the JD Powers results and our own industry research. The customer experience to an extent depends on the human nature involved, so from both the industry research and the Nissan Customer Support Centre we identify if a specific dealer needs assistance in improving service levels, and this is handled in an appropriate manner, with resources, remedies and best practices from all over the world.

    What are the prospects for your passenger car range? It is felt that, while your bakkie and SUV line-up is fairly more comprehensive, the Micra, Tiida, 350Z and most recently, Qashqai, do not provide a big enough range for passenger car buyers.

    Also, since production of the 1400 bakkie has ceased, what does Nissan SA intend doing to ensure it has a strong contender in the half-ton/three-quarter ton segment? And the question on everyone's lips - when will the GT-R be coming to South Africa?

    First the line-up issue: as stated in the first question, we fully acknowledge that we still have some way to go to achieve our goals for the Nissan brand. A key part of this will be to expand our passenger car offering. Without going into too much detail, our plans are focused on the lower end of the market and to appeal to the younger generation.

    Like all the competitors, we can only choose from what is available from our parent company and from what meets the local conditions in terms of usage, fuel, homologation and so on.

    Although there are full line-ups available in the USA and Japan, we feel that in segments above Qashqai we will at this stage cover the market with Crossovers and SUVs rather than typical Sedans:

  • In the USA, Nissan have Sentra, Altima and Maxima - they are all fantastic cars, but unfortunately they are all only available in the Left Hand Drive specification and almost exclusively designed for that market.

    None of these models are available in Right Hand Drive, and the investment necessary for Right Hand Drive conversion and making them fit for local conditions is just not feasible.

  • The good news is that more of the future generation models will be designed for global consumption, and then our choice obviously becomes wider.

    With regards to the 1400 Bakkie:
    Production ceased on this model due to new homologation regulations that came into effect in January 2008. However, there is sufficient stock to carry us until the replacement model - so if you are part of the many die-hard fans & customers for this legendary rear wheel drive workhorse, you still have a chance to get one.

    That in itself answered the question: Yes, we will have a replacement for this model and we believe our contender will be competitive. Our competitors are also reading these replies, so enough said for now...

    Which brings us to the GT-R:
    Both Nissan SA and Nissan in Japan are very keen to bring this fantastic car to South Africa. However, we are still studying some technical aspects - in particular, the GT-R requires a minimum of 98 Octane fuel and we are working to solve this issue.

    This process is taking place at the moment and we should have a clear idea by the end of April. We know that many performance cars currently in South Africa require a minimum of 98 Octane fuel, but Nissan has firm standards to ensure that the fuel meets the design requirement, so only when we bridge this gap will we know if we can bring the GT-R or not.

    If we get approval to sell the GT-R here, deliveries will not start before the middle of 2009 due to the fact that the SA car will be based on the European model and Europe will only get right hand drive deliveries from April/May 2009. We currently have a list (growing daily) of about 150 potential customers eagerly awaiting the final outcome.

    The Sentra, in particular the 200 STI, still enjoys a very loyal following with hot hatch fans. Are there any plans to offer a hot hatch or performance derivative that could compete with the likes of the VW Golf GTi and Renault Megane RS, for example? When will South Africans have access to Nismo products now that the operation has been absorbed into Nissan's global business?

    To be perfectly honest, we are also asking the same questions but can only select from what is available from our parent company.

    The only market with a performance derivative is the USA with the Sentra SE-R, a 2.5 4cyl with 147kW. The latest Sentra is a fantastic car and would have made a lot of sense in our market, but as stated before, this car is only available in left hand drive, and it is simply not technically feasible to change it into right hand drive.

    The S16 (Sylvia, 200SX, 240SX) is no longer in production anywhere in the world. Future products will be more globally-oriented and our choice will be much wider - our earlier statement of needing to cover the younger generation certainly gives a hint that we have something up our sleeve.

    Nismo is quite big in Japan and is starting to show healthy growth in the USA. However, even in Japan and the USA it is purely seen as an "aftermarket supplier" and as such does not carry the normal Nissan warranty.

    In addition to this, due to intensive development and investment for relatively limited volume, it carries quite a heavy price premium. We made Nismo parts available for 350Z, but found little takers.

    Nissan in Japan have now started with fully built-up models (like 350Z) that carry the full Nissan warranty - there could be possibilities with these in the future.

    Nismo is a fantastic brand and we will certainly explore all avenues on an ongoing basis, but the reality is similar to Infiniti, in that it needs a healthy business case to ensure sustainability and customer satisfaction.

    What is Nissan's response to the wave of cheap Chinese imports? How is it expected that these models will affected Nissan's market share in the large lifestyle and commercial vehicle segments - if it has not already done so - and what is Nissan's SA's strategy as these models are expected to further consume its share of the market pie?

    The Chinese imports are not just a phenomenon in South Africa, it is happening in the USA, Europe, Asia and all over the world. What is certain is that if we want to participate in the lower end of the market, we will have to get a lot more cost conscious and take a different approach to design, parts suppliers, production methods and sales and marketing.

    The market is clearly demanding more affordable motoring, but not at the cost of poor reliability. In our market we have seen new brands entering, gaining considerable share during its initial phase, and then losing more than half of that soon after.

    Nissan recognized these issues for some time and was one of the first major brands to enter the Chinese market with a joint venture.

    Current and future projects will soon bear fruit - yes, this is vague but unfortunately all we can say for now! Indeed, something of this approach can already be witnessed in the new Nissan Livina, which offers exceptional value for money considering its size, engine capacity, detail specification and level of sophistication - but without compromise to Nissan's design, safety, quality, durability and reliability standards.

    We believe the market and our customers understand these standards, trust them and find real value in them.

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