Three years after an unsuccessful attempt to garner a significant presence in India?s lucrative 1.4 million small car market with the Micra, Nissan is preparing for a second attempt by resurrecting its old ?Datsun? car sub-brand. The new brand, globally unveiled by Carlos Ghosn, chairman and CEO, Renault-Nissan alliance, on Monday, will start sales by early next year with a hatchback called ?Go?. It will target first-time buyers in emerging markets like India, Russia, Indonesia and South Africa.
Marking a return after almost 30 years on the shelf (it was killed in 1986), Datsun hopes to challenge domestic car industry majors, Maruti Suzuki and Hyundai, with an aggressive starting price below R4 lakh for the Go, while promising best-in-class space and improved quality levels than rivals.
Nissan will have a tough task ahead, say consultants, since Maruti and Hyundai together control a 73% market share in small cars and have a much larger sales network than the nearest competition.
Ghosn said that Nissan is focussing on emerging markets because the global car market is in transition today and by 2016, 60% of all sales will come from such high-growth markets, from 40% in 2007.
?When launched in 1914, (Datsun) launched a new era of personal mobility and became an iconic brand. Today, we open a new chapter. Customers in high-growth markets are asking for high quality, top reliability cars, we are replying to them with Datsun. It is geared towards the middle-class, but will be a category up in that price range,? he said.
With Datsun, Nissan has set an ambitious target for itself. Ghosn said that Nissan (with Datsun) aims to garner a 10% share of the domestic passenger vehicle (PV) market by 2016, from just 1% today. In comparison, market leader Maruti has a 40% market share in PVs, while Hyundai is at 16% and Mahindra at 11%. Even players like Ford, Honda and General Motors, who have had local operations for over a decade, do not hold over 5% market share.
RC Bhargava, chairman of Maruti, said new entrants will have to set high market
share targets to challenge their employees to achieve something close to it.
?New companies have to try and get a share from the market leader and its our job to protect our share. It?s a tough job for any new player in any market. It?s like a race, everybody thinks they have a chance in the top three, so they all have to make the effort. How far they go depends on how much they will invest in the models and sales network,? he said.
To cement its position in small cars ? the belly of the Indian car market ? Datsun will not only have to target a low purchase price, but will have to focus on multiple fronts like low ownerships costs, easy workshop availability and building a trustworthy brand for a segment of customers where the risk appetite is low, said analysts. The job is particularly tough given the slowdown in car sales ? in April-June FY14, car sales have dipped 10.41% at 4.34 lakh units.
Among previous attempts by Nissan, the Micra, the first small car launched by the Renault-Nissan alliance in India, sells just just over 1,000 units a month, while its twin ? the re- badged Renault Pulse, sells an additional 500 units.
In comparison, small car king Maruti?s Alto sells about 20,000 units a month, while the more premium Swift sells about 15,000 units and WagonR about 12,000 units.
Hyundai?s Eon and i10 both do over 8,000 units a month, while the Ford Figo, Honda Brio, Tata Indica, Volkswagen Polo and Toyota Etios Liva all sells between 3,000 and 5,000 units a month.
Volume growth for Nissan has been tough in the highly-competitive domestic market (volumes in April-June FY14 fell 42% at 6,273 units), with the company facing several challenges in the past few years.
