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Old 23rd August 2013, 13:59   #1
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Default Nissan India : The Way Forward

Seen any Evalias lately?

India plays a critical role in Nissan's Power 88 strategy; Carlos Ghosn aims to raise global market share as well as operating profits to 8% by 2016 - 17 (both are currently 6.x%).

As part of this plan, Nissan has gone on record to state that it targets 10% market share in India by 2016. The company wants to get there by launching 10 new cars and taking the number of dealerships to 300 (currently ~100).

Really? Makes me wonder if the pain is on the left hand, but the balm is being applied to the right.

Nissan India's share of the passenger car market in July 2013 was less than 1% (Thread Link (July 2013 : Indian Car Sales Figures & Analysis)). In the calendar year so far, it's averaged at 1%.

10% market share in <4 years is a tall order coming from a brand that outsells only Hindustan Motors, Fiat and (sometimes) Skoda. Further, other than Maruti, the sole manufacturer to cross the 10% share mark is Korean giant, Hyundai. Mahindra still doesn't have 10% of the market, despite blockbuster products like the Bolero, Scorpio & XUV500. Neither does Toyota, with its unparalleled brand equity and UV successes.

Leave aside growth, Nissan's market share has actually been tanking. A year back, Nissan had 1.8% of the market (Stats Link (July 2012 : Indian Car Sales Figures & Analysis)).

In calendar year 2012, India saw about 26 lakh cars moving off showroom floors. Depending on which research firm you listen to, that number is expected to grow to 35 - 50 lakh cars in 4 years. Can Nissan increase its market share 10 times over in 4 years? Can the Japanese brand sell 20,000 cars a month (10% of current market size) to 40,000 cars a month (projected market size) by 2016 - 17? Well, nothing is impossible...but it's going to be very, very difficult.



So, what's wrong with Nissan's India strategy?

  • Horrible Marketing & Promotions: Nissan's entire portfolio of cars is under-performing. There's nothing seriously wrong with the cars; the problem is that Nissan and its dealers simply aren't able to sell them! The Micra is a decent hatchback (especially the new Rs. 3.5 lakh VFM version) and the Sunny is a spacious, reliable & fuel-efficient sedan. The Evalia is well-priced, spacious & fuel efficient, yet it completely bombed in the UV market. When Nissan can't successfully market the models it has on hand today, how is it ever going to handle a wider, more complicated portfolio? New cars are hardly the solution when branding & marketing are the real issues. Just ask Chevrolet India!
  • Export-Oriented Focus: For every car Nissan sells in India , it exports 3 (based on 2012-13 figures). Fact is, Nissan is the 3rd largest vehicle exporter from India (after Hyundai & Maruti). This, coupled with how Nissan conveniently outsourced its dealership network, makes me believe that exports are more important to Nissan than the domestic market. If that's the case, their efforts within the Indian space will always be half-hearted.
  • Brand Overload: The top 7 car manufacturers in India focus all their energies on a single brand. Nissan has low brand recall in India, while Renault was a complete stranger until the Duster came around. Clearly, both the nameplates are brand new and can't match the awareness levels of more established players. In the midst of this comes a 3rd brand - Datsun! If you had a limited marketing budget (which every company does), would you spend it on strengthening 1 brand, or spread yourselves thin with 3? As a fresh new player in the market, would you rather build 1 solid brand or 3 relative unknowns? To top it off, there is talk of a 4th brand from the group coming soon (the luxurious Infiniti).

    India is a fabulously diverse country with innumerable "local" markets, cultures, languages & preferences. To put things in perspective, our country has 82,000 registered newspapers (USA - the largest auto market - has a 'mere' 13,000). With this diversity comes marketing complexity. It's impossible for a single group to establish 4 successful automotive brands in the short to medium term.
  • Outsourcing Dealers: There isn't a doubt that Nissan India took an easy shortcut with establishing the dealer network. It simply outsourced the task to a master franchise called Hover Automotive. In effect, customers deal with Hover Automotive, and not Nissan. Likewise with the dealers, who ended up so frustrated with this arrangement that they stopped accepting new cars in December 2012! Maruti & Hyundai consider their sales & service experiences to be a top priority, so much so that they have large teams of professionals managing the function. Nissan clearly doesn't care enough about this area to handle the dealer network itself.
  • Terrible Sales & Service: This is related to the previous point. Frustrated dealers = frustrated service. As an owner of a Nissan product, I can tell you that the sales experience was horrendous. The forum is full of complaints too (link from earlier this week). Nissan doesn't seem to realise that the dealer is the face of its brand and by outsourcing that responsibility, Brand Nissan is being tarnished on the street. Takes quite a feat to recover from a bad reputation in India where word of mouth makes & breaks deals.
  • Confused Customers: The Micra, Sunny & Duster are shared between Nissan & Renault. The real difference between the two is a bunch of lights, radiator grille and, of course, price. What goes through the layman's head when he sees identical sedans, hatchbacks & SUVs, albeit wearing different (relatively unknown) badges? CONFUSION! As if cross-badging between two brands wasn't enough, Ashok Leyland will soon be selling a rebadged Evalia. Then, the upcoming Datsun Go is based on a Nissan Micra.

    Would the Swift have had such enormous brand equity if it had an identical copy from another brand? Would the Innova? The i20? Fat chance.

    Here's a neat article on cross-badging in India.
  • Datsun: Personally, I think the whole idea behind Datsun's introduction is flawed. We've witnessed Nissan's products being intentionally priced below that of Renault, even in the B2 hatchback space. Doesn't that make Nissan the "cheaper" brand of the group? The base Micra was recently re-positioned to a price point of Rs. 3.5 lakhs. Doesn't that make Nissan the economy brand already? How much cheaper do you want to go? Datsun has anyways indicated that it's starting price will be Rs. 3 lakhs. Does a difference of Rs. 50,000 require an entirely new brand, along with the enormous effort that goes behind building it? Maruti & Hyundai successfully sell cars for 3 lakhs on one hand, and 6 lakhs on the other. Big deal. Why do you need a whole new brand for a product that's 50K cheaper? Beats me.

    If the Datsun Go had a diesel motor on offer, that would have been one heck of a differentiator in the entry segment. However, there is only a petrol on offer. The Eon - even with Hyundai's muscle behind it - initially performed below sales expectations. Would the conservative first-time car buyer from a B town put his money on an unknown brand, or plonk it on a trustworthy Maruti / Hyundai instead? I think we know the answer to that one.
  • Lack of Brand USP & Differentiator: Maruti stands for VFM, trust & fuel-economy. Hyundai for design, features & quality. Toyota for reliability and VW for solid, German build / image. What is Nissan's USP? Unless the brand takes corrective measures, it is going to end up as another Chevrolet in the country.

    Noteworthy to mention that the brand under-performs at both, the economy segment (Micra) and the luxury (Teana, X-Trail, 370Z).
  • Unconventional Designs: The pre-facelift Micra looked too feminine, the Sunny wears oddball lines, the Evalia is too boxy and the X-Trail is plain ugly. Nissan's cars stand out, though not in a good way. The styling lacks mass appeal. Thanks to BHPian blue_pulsar for this point!

The Way Forward?

The competition is only getting fiercer. We've seen Maruti's improvement in overall quality levels, Hyundai is gonna have the diesel i10 soon, while Honda & Toyota already have products + diesels under the Rs. 6 lakh mark.

It's a 5 point plan really:
  1. Simplify: Spreading yourselves thin across 3 brands is really going nowhere. Instead of a fire away machine gun approach, the need of the hour is sniper-like precision shots. Since Datsun is already here, it's too late to talk about dumping it. Here's what I suggest: Two years from now, whichever is the stronger brand between Nissan & Datsun stays (discard the other). My bet is, Nissan will always enjoy higher brand equity & awareness than Datsun.

  2. Market: Successfully marketing cars is no longer rocket science. Differentiate & sell the hell out to your target audience. Don't try being everything to everyone just yet.

  3. Dealers: Short-term pain, long-term gain. Recruit, develop, train & manage your brand's dealerships yourself. There is no other way to a successful relationship with your customer.

  4. Stop selling the same, identical car at different prices under different brands: Thankfully, Nissan has realised its folly here. They've publicly stated that the Terrano is the last cross-badged product.

  5. The Domestic & Export divisions have to function as individual business units (management, accountability, targets, strategy etc.). As good as the exports are, the domestic business is under-performing. When export + domestic numbers are clubbed together, it'll make for a good report. On the other hand, the standalone local numbers tell a different story.

Additional Notes:

• Renault-Nissan's production capacity is 400,000 cars per annum. It is shared in a 30:70 ratio between the two brands.

• A lot of the points listed here are applicable to Renault as well.

Link (Honda India : The Way Forward) to a similar analysis on Honda India from 2011.

Last edited by GTO : 26th August 2013 at 14:49. Reason: Typo
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Old 23rd August 2013, 14:15   #2
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Default Re: Nissan India : The Way Forward

As they have launched the Datsun brand, guess Nissan can leave the super cheap and cheap hatchbacks to the Datsun brand, have Versa/Sentra/Altima/Maxima/Rogue/Murano etc mainline numbers for Nissan, have Renault for French/Romanian rebadges, and have Infiniti for the luxury ones.
But first they need to take dealerships in their own hand.
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Old 23rd August 2013, 14:17   #3
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Default Re: Nissan India : The Way Forward

GTO - Am glad that such articles keep coming up frequently on Tbhp. They are brilliant culminations to opinions/thoughts/discussions happening across threads!

My reply doesn't contain much else or add value but that is largely cause you have covered the major and minor (though all of them seem to major!) aspects of it.

But if i were to really say put a priority to them:

1. Horrible Marketing & Promotions
2. Terrible Sales & Service
3. Confused Customer
4. Brand Overload

would be my top 4 to fix in that order.

1 to 3 are customer facing and while the long term fixes come together, these would provide some immediate foot falls. As for #4, "assuming" that it isn't really something that the customer directly cares for, it definitely is a big consideration for Nissan on where to spend the money to fix those listed on 1 to 3!

But even beyond the ones above, they have tons of work to do that you have listed. For some, it might look like they have set themselves a seemingly foolish target but Carlos Goshn is a miracle man of sorts! I hope he has some tricks, old and new, up his sleeve.

Last edited by Nilesh5417 : 23rd August 2013 at 14:19.
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Old 23rd August 2013, 14:21   #4
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Default Re: Nissan India : The Way Forward

Excellent write-up GTO!

A relatively unknown manufacturer (by Indian standards) breaking into our market is not easy.

What's needed is a strong push in terms of marketing AND organically generated word of mouth. To get that word of mouth buzzing, you need at least one product that truly stands out. That's the only way you'll become a household name in India. Nissan hasn't had a launch that's got the masses excited as yet. The Sunny came close to being something unique, but it wasn't quite the home run.

cya
R

Last edited by Rehaan : 23rd August 2013 at 14:59.
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Old 23rd August 2013, 14:38   #5
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Default Re: Nissan India : The Way Forward

Beautifully summed up write up about Nissan India's current scenario and why they got there in the first place.

The products on their own are pretty good. I have extensively driven a friend's Nissan Micra (who bought it solely based on the fact that he owned a G35 in the states and was sold on Nissan products), I can tell you that it is built better than the Swift (the segment best seller) and is more comfortable to drive and sit in (may not be as exciting). However, none of our friends even want to consider buying a Nissan for the shoddy dealer exp and the very fact that they don't see enough of them on the road! This is a classic case of real life experience and Word of mouth publicity doing Nissan in.

I would love to see similar write ups on major manufacturers in India, starting with Tata, VW (two manufacturers really going nowhere) and moving onto Toyota (one hit wonder) and Maruti (Small car hit machine). I did try writing about Tata in another thread, but GTO's write ups are way better...
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Old 23rd August 2013, 15:07   #6
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Default Re: Nissan India : The Way Forward

Excellent post GTO! *thumbs up*

This article does put things into perspective as far as Datsun / Nissan / Renault are concerned.

From what I've understood, Nissan is trying a VW by spreading their portfolio in order to capture a significant share of the market (Skoda-VW-Audi) Introduce a set of brands and position them accordingly. However, unlike VW's cautious approach, Nissan has gone all guns blazing! There was a time when they sold just two CBUs, the X-Trail and the Teana. There was little activity from them. But we blinked and nearly missed a slew of launches including the introduction of two brands!

I've speculated that the Datsun brand will cater to the first-time car buyers with low cost cars while Nissan as a brand will be positioned higher and they will continue to sell the Micra and Sunny. What I'm hoping yo see is proper French cars from Renault. Lord knows if that will ever happen! But this will allow them to position Renault as a premium brand and distinguish them accurately. That said, it the group decides to use Renault to sell rebadged Dacias, it may not work too well. They will have to revisit their strategy vis-à-vis is brand positioning. I don't think they can get away with selling rebadged Dacias at inflated prices.

EDIT: Oh, and poor after-sales and service-backup only compounds the problem.

Last edited by suhaas307 : 23rd August 2013 at 15:12.
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Old 23rd August 2013, 15:23   #7
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Default Re: Nissan India : The Way Forward

Excellent write-up… Thank you!

I believe they need one stand-out product to bring up the brand name. Their sibling Renault have showed how an unknown entity can turnaround and become a household name with the arrival of Duster. 60K units in 12 months is no mean feat.

The MPV segment had huge potential, but their evaluation of the segment went completely wrong when they chose the panel van Evalia as the candidate.

Quote:
Originally Posted by GTO View Post
Export-Oriented Focus: For every car Nissan sells in India , it exports 3 (based on 2012-13 figures). Fact is, Nissan is the 3rd largest vehicle exporter from India (after Hyundai & Maruti). This, coupled with how Nissan conveniently outsourced its dealership network, makes me believe that exports are more important to Nissan than the domestic market. If that's the case, their efforts within the Indian space will always be half-hearted.
And I noticed that their export-quality vehicles looks and feel much more premium than what is sold in the domestic market. Nissan as a brand just don’t provide an air of honesty and commitment to the Indian market.
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Old 23rd August 2013, 15:32   #8
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Default Re: Nissan India : The Way Forward

Could not agree for more !!

Especially creating 3 seperate brands and then marketing for it. Duster sold without any marketing and only now we are seeing advertisements. So apart from that Its not easy to market Renault/Nissan and going forward Datsun !!

And to top it, they have been only re-badging cars and launching. Doesnt it mean they need to market same car twice ? Sunny and Scala/ Micra and pulse and now duster and terrano !!

Interesting to see how they come out of this(not just Nissan, even Tata,Fiat and GM are in identity crisis)
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Old 23rd August 2013, 15:49   #9
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Default Re: Nissan India : The Way Forward

Great write up, GTO.
Nissan has to improve dealership coverage first. I wonder how many dealerships they have in the north east. Then they have to train up the dealers. A few months back, we went to check out the X trail for my friend. They did not have a display vehicle, let alone a test drive one. They promised to get back to us, (but that never happened.) Compare that to their japanese cousins toyota and honda..The fortuner and CRV TD vehicles were promptly sent to us on the same day.
What irritated us most was the guys at nissan tried to get us to look at the sunny. Heck, I take a guy looking to buy an xtrail/CRV/T fort and here you are trying to sell him a sunny !
To get back to the topic, although I agree about the confusion the rebadged products create, I think the terrano is a good move. If duster can sell 4-5k a month, the terrano can surely manage 1.5-2k. Considering that its a rebadged product and the current numbers nissan is averaging, its good numbers for them.
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Old 23rd August 2013, 15:58   #10
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Default Re: Nissan India : The Way Forward

A dealership is the face of the company.
Over 15 years ago we walked into the dealership of an unknown unheard of company and bought a car because the dealer was so welcoming and eager. That brand is now known as hyundai and the car was a santro.
In case of Nissan, the dealers feel ignored, and they don't really bother with customers.

Micra is a wonderful car, but if you crack the bumper there is often months of waiting. Nissan is ignoring the market, and frankly speaking, if the brand does not care about domestic market, why should the customer care about the brand.
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Old 23rd August 2013, 16:13   #11
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Default Re: Nissan India : The Way Forward

I'll reel out my Nissan experience. They have two showrooms 1 km of each other in Bengaluru, on Queens road and Musuem road (Don't know why?).
Interested in the Micra a year back, I landed up there one morning on a supposed 'mela' day where freebies and games were on.
The sales team were so engrossed in tying balloons and in their team pep talk, they completely ignored me. I found this funny, as the event was on 'for the customer'. When they were finally organised the SE got a car out for a test drive, but I had barely driven up to the gate when we were stopped by the security saying the SE had no clearance to take the car. When both started arguing, and fighting I quietly exited the melee (not mela), brand permanently blocked out of my mind.
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Old 23rd August 2013, 16:44   #12
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Default Re: Nissan India : The Way Forward

Quote:
Originally Posted by blackasta View Post
As they have launched the Datsun brand, guess Nissan can leave the super cheap and cheap hatchbacks to the Datsun brand, have Versa/Sentra/Altima/Maxima/Rogue/Murano etc mainline numbers for Nissan
It's one thing to want that kind of positioning, another to accomplish. Takes years to establish a single brand in India, leave aside 4.

Whoever knows of Nissan knows they make a economy hatchback. Nothing's going to change that.

Quote:
Originally Posted by Nilesh5417 View Post
Carlos Goshn is a miracle man of sorts!
Agreed, one man I deeply respect in the auto industry. However, Carlos Ghosn isn't active in India. The market is too small for his time. Period.

Quote:
Originally Posted by suhaas307 View Post
What I'm hoping yo see is proper French cars from Renault.
French cars in India will be similar to the Opel story. Not too reliable, expensive parts...in short, nothing really going for it.

For those wanting a "European" build, there's Skoda & VW.

Quote:
Originally Posted by rajshenoy View Post
Doesnt it mean they need to market same car twice ?
That's what I meant by spreading themselves too thin. Their marketing budget is a fraction of what Maruti, or even VW, spend. And Renault-Nissan have to use that for multiple brands & cars.

Quote:
even Tata,Fiat and GM are in identity crisis)
So true.

Quote:
Originally Posted by pyrodrive View Post
I think the terrano is a good move. If duster can sell 4-5k a month, the terrano can surely manage 1.5-2k.
Good for Nissan, not so for Renault / the group. Reason = Cannibalisation. Duster sales will definitely swing to a lower point.

Last edited by GTO : 23rd August 2013 at 16:48.
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Old 23rd August 2013, 17:00   #13
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Default Re: Nissan India : The Way Forward

I believe Nissan should have concentrated all their efforts in expanding the dealership network at least till all tier-one cities were covered. For example, Bangalore has only one dealer as far as I know. And the showroom (and probably the service centre too) lies in the heart of the city. I know people who don't even want to go to MG road two times a year for servicing their cars, and are exploring other options.

Compared to this, Hyundai has so many showrooms on the edges of the city. Heck, even Fiat has come up with 3 sales and service centres in Bangalore!

I believe Datsun brand is not as important to Nissan as they claim it to be, in India. They are going to use the Indian facility to design and develop the cars to export to countries where the profits can be higher.
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Old 23rd August 2013, 17:01   #14
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Default Re: Nissan India : The Way Forward

Excellent write up GTO.

If Nissan is seeing this, they should ramp up their strategy for India. Right now, all talks about their increasing market share looks like mere lip service.

Nissan has to seriously work on increasing their Brand image. IMO, Nissan did not want to dilute their brand image (like Maruti and Hyundai have) by selling cheaper cars in bigger volumes. This would make it difficult for them to sell more expensive cars (Maruti and Hyundai are struggling to increase volumes to their 15+ Lakhs segment). That is why Nissan decided to bring in "Datsun".

Nissan should plan something like the "Nissan 360" in India.
http://www.nissan360.com/
http://www.nationmultimedia.com/busi...-30213247.html

IMO, this would help Nissan to improve its perceived Brand Value and break a lot of mind-sets.
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Old 23rd August 2013, 17:22   #15
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Default Re: Nissan India : The Way Forward

GTO Superb Post. If only Nissan Renault spent less money on the big consultant and applied some India focused common sense.

To go further

1) Even now it may not be too late to Brand the small car as Nissan - Datsun rather than go solo with Datsun.

2) At some point frankly it needs to be Renault - Nissan joint Brand.

3) Their pricing policy (skimming the market) is starting to affect the Duster itself now with the EcoSport arrival and with the Nissan Terrano version coming in soon, they need to make a immediate correction to price it below the Duster not above (as already indicated) else the entire logic of which is a more premium brand goes haywire. They need to relook at the pricing agreement realistically.

4) People went for the Honda Brio and Amaze against options from Hyundai and Maruti due to the Honda Brand Image and Maruti like pricing combo. With Datsun Nissan will not get this advantage. For the masses Datsun might as well be a Premier. They need the Nissan name and quality along with penetrative pricing.

I don't think Nissan or Renault will do any of this or really speaking any of what GTO has mentioned and so is unlikely to do well over the next 5 years at least.
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