Challenged Infiniti is looking for a rebound

The shiny dealership sits on the southern edge of Ottawa as the crown jewel in the 17-dealership Myers Automotive Group.

“It’s our newest and biggest dealership,” said CEO Cyril Leeder of the Myers Infiniti operation. The group spent $8 million to build the 26,000-squarefoot (2,400-square-metre), two-storey facility, which opened in December 2018. It stands as a symbol of one dealership group’s faith in the future of the luxury brand.

“If we had to do it again, we’d make exactly the same decision,” said Leeder, who doesn’t buy into the gloomy forecast for Infiniti.

The brand is hanging tough after a two-year market-share slide in Canada and worldwide. Sales of 188,944 units around the world in 2019 were down 25 per cent from Infiniti’s best year in 2018, when it sold 249,000 vehicles, according to the Automotive News Data Center in Detroit. In 2019, Infiniti was pulled from western Europe, and its market share in the United States dropped to 0.7 per cent.

As with most other brands, the COVID-19 pandemic has also had an impact. Infiniti reported that its Canadian sales were down 47.3 per cent — worse than any other major brand — (5,783 total sold) in 2020 versus 2019 and in the United States reported 2020 sales of 79,502, down 32.5 per cent from 2019.

‘BETTER DAYS AHEAD’

Yet even with such troubling signs, it is premature to write off Nissan’s 31-year-old luxury brand, say dealers, industry analysts and company executives.

“We think there are better days ahead,” said Leeder. “I like the direction they’re heading.” The three months from August through October delivered the best sales volume his company had seen for the brand since Myers opened the dealership less than two years earlier, he said.

Rob Gowe, general manager of Markham Infiniti in the Toronto suburb of Markham, said he is also optimistic of a resurgence of Infiniti sales. He joined the dealership in August.

“I wouldn’t be with the brand if I thought that it wasn’t going to be around,” he told Automotive News Canada.

The dealership’s parent company, Drive Autogroup, has considered expanding Markham Infiniti or even building a new structure. But the company is delaying a any action until it sees the lasting effects of COVID-19 and the popularity of new models, said Todd Lalonde, the company’s director of operations.

“The last 12 to 14 months have been a bit of struggle,” he said. “Everybody’s holding their breath on the QX60.”

Infiniti has vowed to launch five new vehicles within three years, starting with a redesigned QX60, the first full remake of the midsize three-row crossover since it debuted as the JX35 in 2013. In September, the company revealed an animated teaser of a heavily restyled QX60, which is expected to be available in 2021.

In October, Infiniti gave Canada’s dealers a glimpse of future products in a Zoom conference call. Jason Morrey, general manager of Morrey Infiniti in Burnaby, B.C., and chair of the Infiniti Dealers Group, said the new models can’t come too soon for dealers.

“Like any brand, we rely on new product. We’re needing a refresh of the lineup.”

In addition to the remade QX60, the new products include the QX55 — a coupe-inspired crossover — and a series of concept vehicles, including an electric SUV called the QX Inspiration and the QS Inspiration EV sedan. In 2019, Infiniti introduced the Canada-only Q50 and Q60 I-LINE performance sedans, and a redesigned compact QX50 crossover.

CANADA KEY MARKET

Steve Rhind, manager director of Infiniti Canada, told Automotive News Canada this country is the third largest Infiniti market in the world, behind the United States and China.

Rhind, who assumed the role last March, said sales have been affected by both the COVID-19 pandemic and a decision to discontinue fleet sales, which was 12 per cent of the brand’s business in Canada.

Eliminating fleet sales helped protect the vehicles’ residual values, he said. The brand also reduced inventory levels to the industry average 65-day supply, he said, and changed the margin structure to allow more money for dealers.

“By reducing fleet while focusing on sustainable growth ... the Infiniti brand has made a significant change to our business approach, which will lead to increased profitability in 2021,” said Rhind.

Morrey said retailers have been frustrated by the long wait for new models, but Infiniti executives assured them the product cycle will be shortened.

Leon Cheliadin, general manager of Applewood Nissan-Infiniti in the Richmond (B.C.) Auto Mall, said his company reopened an Infiniti dealership there in September after a previous owner closed at a nearby location. Applewood Nissan/Infiniti is under one roof to keep overhead costs down.

“I really feel that Infiniti is still there,” said Cheliadin, who participated in the dealer call with the company. “I think the future for Infiniti will be fine.”

NOT TOO MUCH NISSAN

New Infiniti products will be part of a “Nissan-plus,” strategy, COO Ashwani Gupta told sibling publication Automotive News in May. That means the company will make greater use of Nissan platforms and components and adopt Nissan’s e-Power hybrid system, which uses an internal-combustion engine solely as a generator to power electric motors.

Automotive News also reported that Infiniti’s current rear-wheeldrive models will likely be replaced by a Nissan platform, perhaps derived from the Altima or Maxima.

However, Brian Murphy, analyst at Canada Black Book Inc., cautioned that Nissan needs to keep its luxury brand distinctive. For example, he said Toyota’s Lexus line established buyers’ expectations of a luxury brand by choosing right from the start to have dedicated retailer showroom space.

“The Infiniti buyer needs to feel they’re buying an Infiniti,” said Murphy.

Morrey said that’s the plan. “We’ve talked to the leadership in Japan. They absolutely confirmed [Infiniti] will be a standalone luxury brand.”

The Infiniti reboot will occur amid significant cost cutting by the RenaultNissan-Mitsubishi alliance, which is cutting models and factories.

But Rhind said the sharing of platforms is common for all makes. (Lexus, for example, uses the Toyota RAV4 platform for the NX 200t.) Rhind said it is the upgraded components, premium finish and enhanced customer service that differentiates the product.

“It’s not a rebadging of a Nissan product. The experience will be uniquely Infiniti.”

The brand has 39 dealerships across Canada, of which 26 are standalone and 13 are shared with Nissan, according to the company.

“There needs to be a premium, exclusive experience for the customer,” Rhind said, including providing service enhancements, such as test drives from home and concierge maintenance service.

Much of the brand’s future hinges on how well the new models are received, said John Bardwell, automotive product specialist with Bond Brand Loyalty in Toronto.

“They need QX60 to be a hit.”