Plug-in Car Sales Better but Still a Blip – Here’s the Problem and a Few Solutions

Plug-in hybrid and battery electric vehicle sales had their best month ever in September, hitting 5,500 units. Overall, light duty new vehicle sales in the U.S. hit the 1.184 million mark, so plug-in vehicles made up less than a half percent of the total and are just a blip on the screen.

Nissan just named a new executive, Billy Hayes, to oversee sales and marketing of the Nissan Leaf and other electric cars, and report directly to CEO Carlos Ghosn. Nissan’s global marketing executive Andy Palmer told this to a small group of journalists recently, and spoke frankly about the marketing dilemmas Nissan is facing. Sales of the Leaf got better in September, but they’ve been down for a while and Renault Nissan has big plans for EV sales in the near future.

The Problem:

• Nissan’s Palmer says that it takes four to six times as long to sell a plug-in car as it may to sell a gasoline-engine car of the same size and which might be half the price. Nissan is looking at ways to compensate dealers for the extra sales efforts and education needed to close sales with car shoppers. They’ll start first in Japan and then go globally with the campaign.

Nissan is facing real problems with the battery degradation crisis coming from Arizona Leaf owners and a federal class-action lawsuit. Mark Perry, director of product planning and advanced technology, announced his retirement from the company just before Nissan named Hayes its new EV marketer. Perry was an evangelist for the Nissan Leaf – if you ever went to a relevant industry conference, you would see Perry speaking on panels and championing the Leaf at an exhibitor booth. It’s highly unlikely Perry voluntarily retired. Ghosn, Palmer, and Hayes have their hands full in expanding sales figures for the Leaf and its list of other EV products.

Sales of high-mileage small-to-midsize cars and crossover utility vehicles is the biggest challenge for automakers and dealers to move up the EV numbers. Those fuel-efficient vehicles are doing better in sales as gasoline prices go up, and consumers have the option of buying these vehicles at sometimes half the sticker price of plug-in vehicles.

• AutoRetailNet did an online survey and found that there’s a wide gap between Chevrolet dealers who are enthusiastic about marketing and selling the Volt and those doing little-to-no sales volume. They had differing opinions on whether the Chevy Volt would sell more next year, and whether it was being properly marketed.

• There was also a depressing blog post by an BMW ActiveE driver and electric car advocate, who did some mystery shopping for a Chevy Volt. One dealer did a good job of answering his questions and offering a test drive. However, at two other dealerships, salespeople tried to steer him over to the Chevrolet Cruze, emphasizing its superior space, the challenges of plugging in, and the fact that it’s half the price of the Volt.

The Solution:

• Even though support has waned in legislatures in Washington and state capitols, incentives will be necessary for a while. This means federal tax incentives and state and local rebates. Another channel that needs to be increased is automakers offering special financing packages on plug-in electric vehicles. Leasing is helping for now, but purchase incentives (zero percent loans, etc.) would help. Another possibility is including charging station installation (such as Level 2) in the loan package, so consumer can have that $1,500 charger installed in their garage for a slight increase in the monthly payment. Eventually, plug-in vehicle sticker prices are going to drop, but for now, public and private incentives are necessary.

Dealers need their own incentives. As Nissan’s Palmer said, automakers need to find ways to increase compensation to dealers to improve the sales process.

Training and education are needed. Along with incentives, dealer staff needs support for expanding the consumer marketing experience. How to answer consumer questions, present them with options, and take them for a ride and drive experience are necessary. This will also mean encouraging dealers to participate in public events to get “butts in seats” and help consumers to have their own experience and education.

Move the metal. Automakers are very limited about their assembly line production goals for the next couple of years (especially Nissan, Honda, and Ford). Until they ramp up production and deliver more plug-ins to more dealers, the process and product will be crimped and scarce.

Coordinate marketing campaigns. State laws have a big effect on how dealerships are managed and how the relationships between OEMs and dealer networks work. Dealers are legally defined as independent businesses, outside the scope of the automakers. It’s very difficult for dealer sales staff to make a good living, usually being in commission-only jobs. They want to close as many sales as possible to make a good living. If Nissan is correct and it takes four to six times as long for them to sell a plug-in, then that’s the real challenge to increasing sales volume. Automakers and dealership owners will need to commit time, money, and effort to see plug-in numbers increase.

It is possible to do it. When automakers and their dealer networks are excited about a new product, they will put in the necessary marketing efforts to move the metal. This needs to be applied to plug-in electric vehicles as well. You’ll see this happen with luxury car leasing packages in the fight to be number one in that segment; rollouts of revamped cars and trucks that are strong sellers in their segments; and more recently in used/previously owned cars that are getting more support from franchised and independent dealers in certified pre-owned vehicle programs.

Don’t forget about fleet sales. In the US, fleet sales make up about 20% of the total new vehicle sales and play a critical role in the automotive supply chain working smoothly. Dealers don’t get that much out of fleet sales – usually just a few bucks per car. The real deal is between OEM fleet sales departments and fleet buyers (including fleet management companies like GE Capital Fleet Services and PHH Arval). Still, you can’t forget about fleet. Fleet managers are buying more EVs, but that needs to increase through direct marketing and incentives. If you can get Enterprise, Hertz, car sharing companies, urban transportation companies, and government and corporate fleets to buy more EVs, that will keep the production pipeline flowing more smoothly and encourage automakers to ramp up production.

 

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