Nissan Motor Co takes the veil off the first car in its resurrected Datsun brand in New Delhi on Monday a sub-Rs 4 lakh hatchback that is part of a foray by the Japanese auto maker into cheap cars for emerging markets.
With the Datsun hatchback and other Datsun models to follow over the next three years one of which could be priced as low as $4,000 (Rs 2.4 lakh) if Nissan can meet its aggressive manufacturing cost objectives Nissan is treading ever so closer to the ultra-low-cost car market.
That market in India is now famously occupied by Tata Nano,a barebones car that retails for between Rs 1.50 lakh and Rs 2.2 lakh.
We try to keep the price positioning for Datsun competitive,so that products are appealing to the lower half of the auto market in India where Nissan has few products competing today,Nissans programme director for Datsun,Ashwani Gupta,told Reuters in an interview.
It is a move that has been generally resisted so far by other global auto giants,such as Toyota Motor Corp.,out of concern a scruffy,ultra-cheap car model could tarnish their high-value brands.
Top Toyota executives,including current chairman Takeshi Uchiyamada,rejected a chief engineers design for a low-cost emerging market car several years ago,saying it was too cheap to be called a Toyota,an engineering executive said.
The car has since undergone some design iterations and was finally launched in India in 2010 as the Toyota Etios sedan,which starts at Rs 5.45 lakh. A hatchback version of the car,launched in 2011,starts at about Rs 4.50 lakh.
Since Nissan plans to market Datsun cars in India through its existing Nissan-branded dealerships,Datsun could expose the Japanese auto maker to similar risks,though executives downplay the possibility.
They say use of a separate brand name should effectively shield Nissans brand image. Datsun,which Nissan once used for its cars outside Japan,has a history dating back to the 1930s.
Were serving different customers with Datsun,said Tatjana Natarova,a Datsun spokeswoman. Thats why we came up with a different brand.
To make Datsun cars affordable,Nissan has been aiming to reduce manufacturing costs to $3,000 to $5,000 per vehicle. The first car is due for a launch in India early next year and Gupta said the company has partially achieved the cost goals.
Still,as price-competitive as that may be,it will face formidable competition from Maruti Suzuki and Hyundai Motor Co,which together control two-thirds of Indias passenger car market,excluding SUVs and vans.
Maruti has about 1,200 retail stores in India,while Hyundai operates a network of more than 350 stores. Nissan,by contrast,has only about 100 dealers,though it says it plans to triple the number of its stores to 300 by March 2017.
Nissan said last year it would revive the Datsun name as a marquee for emerging markets,starting with India,Russia and Indonesia. Eventually,it wants to expand into Southeast Asia,Latin America,the Middle East and Africa.
To make the new name stick,Nissan does not plan to stop with a sub- Rs 4 lakh car. It plans to expand the Datsun brands appeal by following its first car with a second model by the end of next year and a third vehicle by 2016.
By the year ending March 2017,Nissan wants to capture 10 per cent of Indias overall passenger vehicle market. Nissan had a market share of less than 1 percent as of May,data from the Society of Indian Automobile Manufacturers shows.
By then,Datsun aims to generate one third to a half of overall sales in India,which bought 2.7 million passenger vehicles in the year ended March 2013,Gupta said.
To achieve low manufacturing costs,the Datsun product team designed and engineered cars so that nearly all the components needed to build them could be procured within India,Gupta said.