Enjoying a meagre less than one percent market share in domestic sales, with two operating brands ‘Nissan’ and ‘Datsun’, its low-cost failure, the automaker might have been thought of as the tortoise in the catch-up game, who was being overrun by the hares of the industry. But years of persistent decline is surely painting a different picture altogether.
With falling global sales, part-aging product lines, reducing profitability resulting in about 20,000 layoffs in US and Europe, coupled with a downturn in Asia, and all of this amidst the continuous executive level changes, one must consider that the Japanese automaker’s global management is keenly focussed on profitable ventures/markets.
Now, India being one of the major loss making markets also points out to Nissan’s Datsun taking a similar drastic step as Indonesia, with no operational consolidation.
Last month, Nissan announced that it had stopped vehicle production in Indonesia, one of the fastest emerging markets for many global carmakers. While the move opened doors for rivals Toyota Motor Corp. and Honda Motor Company to build on their dominance in the country, the Japanese automobile major said that the decision to stop the production at its West Java plant was part of its plan for “rightsizing, production optimization and reorganizing of business operations.”
Interestingly, the West Java plant used to make the company’s struggling Datsun compact cars and few more models.
Nissan will be the primary brand, supported by Datsun as part of our business strategy for sustainable growth in India.Nissan Motor India
To add to this, while the Indian auto industry is buzzing with BS-VI product lineups, Nissan has not yet revealed its variants, for reasons best known to the company. Nissan did not even confirm any new launches in the detailed questionnaire sent by ETAuto.
Building a struggling brand surely takes a lot of time and effort. But with no clarity on its new product launches, and overall numbers bound to reduce in the future, Nissan India seems to have a dealer consolidation strategy as well, indicating that the budget brand Datsun will eventually be shelved for the second time in its 89-year history.
With a total of 210 dealerships, as of April 2020, spread across 119 cities in India, the series of downfall amplifies a threat for the 40-odd exclusive Datsun outlets in the country, which makes it difficult to say that these standalone Datsun outlets are finding any financial viability. The entire future has run into a complex uncertainty on the BS-VI conundrum.
“Nissan will be the primary brand, supported by Datsun as part of our business strategy for sustainable growth in India,” Nissan told ETAuto in an email response a few weeks ago, refusing to give clarity on what remains for the other existing brand (Datsun) and its products.
Industry experts believe that Nissan is cutting out the Datsun brand in a phased manner by waiting for the range of products to reach the end of their lifecycle and subsequently discontinue them in due course.
The next-generation model lineup will then be able to switch over to a Nissan badge, in an effort to find the light at the end of the tunnel.
When ETAuto reached out to Nissan India with a detailed questionnaire on how strongly it is preparing for the Indian market, the company responded to the email saying, “We are moving as per the government guidelines and our plan on BS-VI readiness. Production and dispatches is as per our plan, however with the recent pandemic and the lockdown in Chennai, it is bound to impact our production and roll out of BS-VI cars.”
According to the sources, Nissan has cut down on its financial budget and is even planning to give pink slips to a portion of its employees and associates.
Again, we must notice that in the quarters of 2019, before the world knew of the novel coronavirus, the car maker was already posting losses.
With the industry paving its way for newly emerging challenges of connected, autonomous, electric, shared mobility and BS-VI emission norms, there did seem a bright spot when Nissan registered the ‘Magnite’ trademark for its compact SUV to be launched this year. However, this again must be noted, was earlier owned by Nissan as the rights of ‘Datsun Magnite’.
“Our strategy for India is based on both domestic and exports. We aim to establish Nissan’s global and pioneering leadership in SUV DNA in India and with that view we will soon be launching Nissan’s global compact B-SUV in India,” the company told ETAuto when asked about the reason for the shift that happened and the change in DNA.
Tracing the Journey
Nissan started as a full fledged carmaker in 2005, through its subsidiary Nissan Motor India Pvt. Ltd. (NMIPL), based out of Chennai.
Taking a unique business model, it started selling cars to Hover Automotive India (HAI), its distribution and sales company. The experiment to outsource its distribution and sales was a totally different experience in the Indian market that proved to be a quell for the Japanese carmaker.
It failed miserably.
Domestic sales came to a screeching halt and frequent disputes between the parent NMIPL and its distributor Hover became the order of the day. Nissan was reduced to a manufacturer as the entire control with regards to marketing and selling of cars became a complete surrender to GM Singh, a Mumbai-based entrepreneur and former Honda cars dealer.
With Datsun, Nissan’s plan was to serve the entry-level market and compete with the dominant Maruti Suzuki.~
But according to the sources in the automotive industry, the Nissan-Hover partnership is another story of the relics left behind another partnership sewed by Carlos Ghosn, Renault-Nissan top boss – now a fugitive on the run.
Ghosn reportedly took keen interest to sew the partnership that resulted into huge losses to NMIPL but ultimately ended the agreement between Nissan and HAI, which finally terminated in April 2014, leading to complex arbitration proceedings.
This concept of a master franchisee had no precedent in India’s auto sector and dented the Nissan brand so much that any recovery is still awaited. In 2012, its dealers too raised their concerns about dealing with Hover as an intermediary and refused to sell Nissan Evalia MPV. Despite hectic negotiations, the relationship ultimately turned sour and by 2014 it started selling its cars by itself.
Also, Ghosn’s constant interference with Indian operations proved detrimental for its operations. Amid the hectic troubles with Hover, he forced the Indian operations with the low-cost model Datsun, which marked its presence in 2013.
Debut model of Nissan’s revived brand, Datsun’s Go hatchback was unveiled in the Indian market by Carlos Ghosn himself. With Datsun, Nissan’s plan was to serve the entry level market and compete with the dominant Maruti Suzuki.
But barely seven years after 86-year old Japanese giant resurrected the Datsun name and pitched it for emerging markets like India, Nissan’s ‘low-cost’ brand has eventually fallen short of expectations with Nissan seemingly pulling the plug on its underperformance.
Nissan’s Datsun offers three models – two hatchbacks and one MUV, all laying in shambles.
Datsun lays the Drench
Datsun Go had started a poor start anyway. Failing to produce any significant sales, it was caught in the midst of a messy divorce between Nissan and Hover.
Months after its launch, the Go was also caught under fire for its dismal performance in Global NCAP tests.
The Go model was then followed by the launch of Go+ in 2015 and Redi-Go in 2016.
Datsun Redi-Go was brought to the Indian market with high hopes as a rival to its alliance partner Renault’s highly successful Kwid. However, the car failed to make any impact as Kwid outperformed Redi-Go by almost three times, which eventually brought the viability of the Datsun brand to the fore.
In October 2019, reports were airing that Nissan might shut down the brand Datsun, but the company announced its festive offers of upto Rs 62,000 on its three models and saved up on its crash.
In fact, there was another report that Redi-Go is undergoing a major facelift and will be launched in March 2020 with a BS-VI compliant engine. “We are going to continue with the Redi-Go and you will see a huge improvement with the facelift next year,” Peyman Kargar, Senior vice president, Chairman of Management Committee for Africa, Middle East, and India (MC AMI), Global Datsun Business Unit, Nissan Motor Co. had said last year in July, to a media interview. However, the new model is nowhere up on the records.
Ray of Hope
Nissan India is in the middle of nowhere. Its employees are leaving and so are the dealers. But lesser employees can also lead to leaner operations and a new league of better and resourceful dealers being added.
The first step of the turnaround strategy for Nissan came with the installation of Rakesh Srivastava as its new Managing Director. A turnaround specialist, Srivastava has to his credit of taking Hyundai Motor India’s sales to new heights, when he clocked over 50,000 sales for three consecutive months, a feat never repeated since then.
Also, a new sub-compact SUV in the fast-expanding segment that is expected to start a new journey as a feature-rich premium offering with stylish design, carrying Nissan’s global SUV DNA from bestsellers like Patrol, Pathfinder, X-Trail, Juke and Qashqai.
Nissan India on the cues from its global headquarter, has embarked on a new sales strategy of reinforced sales and distribution across India. After completing the herculean task of liquidating its BS-IV stock, the company has consolidated its dealer network to launch its most ambitious B-segment SUV by the festive period this year.
However, all this is a monumental challenge for a super fringe player like Nissan, as the brand has lost identity and failed to nurture its stakeholders. Amid a time when the franchise model is hardly loyal in India and having an extremely feeble corporate identity, Nissan is just another story of the carcass left behind for its partnership with the Indian automotive market.