Nissan develops “Datsun” car brand for emerging markets

Nissan and Renault to invest USD 2.5 billion to strengthen base in India

2014/04/16

Summary

Datsun GO
"Datsun GO"
(12th Auto Expo (2014) held in Indiain February 2014)
Datsun GO+
"Datsun GO+"
(12th Auto Expo (2014) in India)

 Nissan Motor Co., Ltd. aims to achieve a global market share of 8% by the end of the fiscal year ending on March 31, 2017. The objective is outlined in the Nissan Power 88, the company’s mid-term business plan covering 2011-2016. To achieve this, the company is developing low-priced, Datsun-brand cars which are newly designed for emerging markets, aiming to significantly increase its unit sales worldwide.
 TheDatsun cars went on sale initially in India in March 2014. The model was mainly developed by local engineers in India and achieved a local procurement ratio of nearly 100%. These two factors have enabled the company to keep costs significantly low. This first Datsun car is sold as the low-priced vehicle, but Nissan says that it offers the greater value compared with other models in the same price range. Nissan also plans to develop and export ultra-low-priced Datsun cars from India to emerging markets in Southeast Asia as well as Central and South America
 During 2014, the company will launch Datsun vehicles in Indonesia, Russia, and South Africa, anticipating that sales of Datsun cars account for at least one-third to a maximum of 50% of all Nissan-produced cars sold in these markets.
 In addition, the Renault-Nissan Alliance will invest USD 2.5 billion in India over the next five years. The Chennai plant is expected to reach full operating capacity in 2014. India is expected to become one of the largest production site for Nissan to build cars for the local Indian market as well as for exporting to other emerging markets.


Related reports:
Nissan: Profits declined in North America and emerging markets (posted in February 2014)
Nissan: 80% of future vehicles will be based on new Module Strategy (posted in April 2014)
Delhi Auto Expo 2014 (part 1): Indian and Japanese OEM highlights (posted in March 2014)



India: Datsun’s first model launched ahead of other emerging markets

 Nissan launched the Datsun Go in March 2014, pricing it between INR 312,270 to 369,999. In the latter half of 2014, Nissan plans to launch the Datsun Go+, a 3,995mm, 7-seater MPV, also in India.

Datsun: achieves significant cost reductions by localizing R&D and procurement

 While the Global Design Center in Atsugi, Japan was responsible for the styling, the 1,700 engineers working at the Renault-Nissan Technology & Business Center in Tamil Nadu, in India, were entrusted with the development work for the car. In addition, the company, by working with more than 100 local suppliers achieved a local procurement ratio of practically 100%.
 When developing the new vehicle, the company tried to avoid new development work, and instead, to maximize its existing technology. The company developed the Datsun based on its V platform which is used for the Micra and March. The vehicle’s transmission was based on manual transmissions that are no longer being used. Also to lower the price, the company eliminated equipment which has little value for Indian customers. * Aichi Machine Industry Co., Ltd. was in charge of developing the manual transmission.

 It is said that automakers cannot easily make a profit from selling low-cost vehicles. However, Datsun is forecasted to achieve an operating profit margin in the range of 4 - 7% throughout the vehicle's lifecycle. And from the initial outset, its marginal profit is in black. The company has made it a policy not to sell products in the first place, if marginal profit turns out to be in the red.
In India, Nissan Envisions Achieving 10% Market Share in 2016
 Existing Nissan dealers in India will sell also Datsun-brand vehicles. The company has plans to increase its dealership network to 300, tripling the number at the beginning of 2014. In addition, Nissan is aiming to increase its market share to 10%, from the current 1.5% or so.

 

Providing greater value for the same price range

 When compared to the competing models being offered by the auto giant in India, Maruti Suzuki, the Datsun GO comes with a bigger body and displacement. As a result, Society of Indian Automobile Association (SIAM) has categorized the vehicle in one-level-higher “Compact” segment, although Datsun GO’s price is in the range of “Mini” segment,
  When looking at the passenger-car by segment in India, we quickly can see that the mini-car and compact-car segments, make up the bulk of all cars sold in India, a staggering 75%.

 

Comparison of Datsun Go and its competitors in India

Segment Compact Mini Compact
Datsun GO Maruti Suzuki
Wagon R Alt K10 Celerio Swift
(petrol-engine)
Seating capacity (person) 5 5 5 5 5
Length (mm) 3,785 3599 3620 3,600 3,850
Width (mm) 1,635 1475-1495 1475-1495 1,600 1,695
Height (mm) 1,485 1670-1700 1460 1,560 1,530
Wheelbase (mm) 2,450 2,400 2,360 2,425 2,430
Engine displacement (cc) 1200 998 998 998 1197
Number of cylinders 3 3 3 3 4
Transmission 5MT 5MT 5MT 5MT/AMT 5MT
Price (INR) 312,270-369,999 348,514-416,409 315,329-331,678 376,385-478,870 442,308-565.853
Notes: 1. The prices provided here are the sticker prices found in New Delhi showrooms, and exclude all taxes, licensing, insurance, and other fees.
2. The segments have been categorized by SIAM.
3. The price of the 1248cc, diesel-engine Swift ranges between INR 545,979 - 670,874.

 

Sales volume of passenger cars in India by segment

Segment Length Engine
Displacement
Models Apr. 2011-
Mar. 2012
Apr. 2012-
Mar. 2013
Apr. 2013-
Mar. 2014
Micro
Mini
-3200mm
-3600mm
-800cc
-1000cc
Nano
M800, Wagon R, Eon
74,527
642,014
53,848
570,024
21,129
568,234
Compact
Super compact
-4000mm
-4250mm
-1400cc
-1600cc
Swift, Brio, Liva, Micra
Accent, Dzire, Etios
854,866
187,026
795,933
226,502
788,189
233,443
Mid-size
Executive
Premium/Luxury
-4500mm
-4700mm
4701mm-
-1600cc
-2000cc
2001cc-
SX4, City, Sunny
Elantra, Kizashi, Corolla
Accord, Teana, Camry
205,353
36,724
30,796
200,163
23,696
25,305
155,089
18,272
2,543
Total Passenger Cars 2,031,306 1,895,471 1,786,899
Utility vehicles
Vans
Ertiga, Innova, Duster
Omni, Eeco, Maxximo
363,772
234,761
553,660
237,298
525,942
190,844
Total Passenger Vehicles 2,629,839 2,686,429 2,503,685
Source: SIAM (Society of Indian Automobile Manufacturers)
Notes: 1. The segments have been categorized by SIAM.
2-1. The "compact" segment is the largest passenger-car segment in India, with prices ranging between INR 400,000 and 700,000. The major OEMs based in Japan, the U.S., and Europe have all entered in the compact segment in India, making the segment most fierce.
2-2. The major OEMs and their respective vehicle models are as follows: Renault-Nissan (Pulse, Micra), Toyota (Liva), Honda (Brio, Amaze) , GM (Beat), Ford (Figo), VW Group (Skoda Fabia, VW Polo), and Hyundai (i10, i20).
3. Sales of the ultra-low-priced Nano released by Tata Motors are floundering, as can be seen in the table above. Tata refreshed both the interior and exterior of the Nano in January 2014, and also launched the highest-trim, Nano Twist. The Nano Twist is designed to specifically win over younger-generation city dwellers by mounting an electric power steering system. The models' sticker prices were increased from the original price range for the series, which was INR 141,000-210,000, to INR 194,000-236,000 (INR 236,000 for the Nano Twist). The company discontinued its lowest price version.

 

Datsun developing ultra-low-price vehicle Lineup

 Nissan is also developing ultra-low-priced Datsun-brand vehicles in India, with plans to start building them at its plant in Chennai in 2015. These vehicles will be built on the CMF-A architecture, which is the standard architecture for Renault-Nissan’s lowest priced vehicles. At the 12th Auto Expo (2014) held in February 2014, the company already debuted its Datsun redi-GO concept car, which is being positioned as base model for the CMF-A architecture.
Datsun’s ultra-low-priced vehicles are likely to cost between INR 200,000 and INR 300,000. Nissan plans to export these low-cost vehicles from India to emerging-market countries in Central and South America and also in Southeast Asia. Renault will also be selling its own brand of vehicles based on the CMF-A architecture, in India as well as in Central and South America. For more details about ultra-low-cost vehicle, please refer to Marklines report: "Nissan: 80% of future vehicles will be based on new Module Strategy".

 

To invest USD 2.5 billion over five years; to build full lineup of Datsun

 The Renault-Nissan Alliance has already invested in India, spending an accumulated total of USD 2.5 billion so far. Over the next five years, the company plans to invest an even further USD 2.5 billion in the country to conduct product development activities and enhance production facilities and equipment.

 The plant in Chennai, which was the first joint plant of the Renault-Nissan Alliance, is building both Renault and Nissan vehicles under the same roof. The plant plays a vital role as an export hub, supplying vehicles to not only the domestic Indian market but also to markets in Southeast Asia as well as in Central and South America. In fact, Nissan exported 75% of the vehicles it built at the Chennai plant in FY2013. The Chennai plant built 218,000 units in 2013. Although it is capable of building 400,000 annually, this figure was recently increased to 480,000. The plant will start building the Datsun GO and GO+ in 2014, and ultra-low-priced vehicles based on the CMF-A platform in 2015.    

 

 



Indonesia: Datsun’s three-row and LCGC-compliant GO+ to debut

Nissan initially will launch its Datsun GO+ in Indonesia in the middle of 2014, which will be followed by the launch of the GO in the latter part of the year. Nissan will set the sticker prices for both the GO+ and GO at less than IDR 100 million. Nissan aims to sell its Datsun brand cars to the level that the sales will account for a maximum 50% of all Nissan-produced cars sold in the country in 2016. The vehicles will be built at the company’s Purwakarta plant, where Nissan expanded the production capacity from 100,000 units, to 250,000.  
About 60% of all new passenger cars sold in Indonesia are 3-row vehicles. In September 2013, the Indonesian government launched its Low Cost Green Car (LCGC) Program. The program provides luxury-tax relief for companies producing qualified green cars that are low cost and achieve excellent fuel efficiency. As a result, some Japanese OEMs have released vehicles compliant with the LCGC Program, which has opened up a new market segment in the country. So far, all of the LCGC compliant vehicles launched by Japanese OEMs are five-seater vehicles. With the launch of the 3-row Datsun GO+, it will become the first LCGC-compliant vehicle built to seat more than five passengers.

Indonesia: Datsun's GO+ and other Japanese OEMs' LCGC-compliant vehicles

Classification Low Cost Green Cars (LCGC)   3-row MPV
Nissan Daihatsu Honda Suzuki Daihatsu
Datsun GO+ AYLA Brio Satya KARIMUN
Wagon R
Xenia
Seating capacity(persons) 5 + 2 5 5 5 7-8
Length (mm) 3,995 3,600 3,610 3,600 4,140
Width (mm) 1,635 1,600 1,680 1,475 1,660
Width (mm) 1,485 1,520 1,485 1,670-1,700 1,695
Wheelbase (mm) 2,450 2,450 2,345 2,400 2,555
Engine displacement (cc) 1200 998 1,198 998 1,000/1,300
Number of cylinders 3 3 4 3 3/4
Transmission 5MT 5MT/4AT 5MT/5AT 5MT 5MT/4AT
Price(1,000 IDR) Under 100,000 76,500-114,150 106,600-117,600 80,200-103,500 144,850-198,550
Notes: 1. The 3rd passenger-seat row in the Datsun GO+ can be folded down to create cargo space.
2. The Daihatsu Xenia is not LCGC compliant, but is listed here to give a comparison among 3-row vehicles.
3. The Toyota AGYA is not listed, as it has the same specs with the Daihatsu AYLA. It's priced between IDR 100.35 and 121.25 million.
4. The market segment representing vehicles priced at IDR 100 million and lower had been extremely limited in Indonesia. For example, except for the Daihatsu AYLA, the Toyota-Daihatsu Group, which has 50% of the Indonesian auto market, offers no other vehicle model priced under IDR 100 million.

 

 



Russia: 1600cc sedan to be introduced under JPY 1.2 million

On-DO
Datsun On-DO sedan released for sale in Russia

 Nissan announced in April 2014 that it will launch a Datsun-brand sedan in Russia. The vehicle is named the On-DO, which derives from the Russian word "on" (he) reflecting the car's male traits of "strength, performance and masculinity".

 Six million used cars are likely to be sold in Russia, and Datsun is positioning itself as the brand that will attract customers who will replace old cars or first-time-car buyers.
  Nissan has stated that it is committed to investing in the Russian market based on the country’s long-term potential, in spite of the recent uncertainty being caused by the tense political situation in Ukraine.


Russia: to launch Datsun On-DO in summer 2014

In April 2014, Nissan announced  a 4-door, 5-seater family sedan, the On-DO. The vehicle has a total length of 4,377mm, and is 1,700mm wide and 1,500 high. It features a 1600cc gasoline engine. Priced at RUB 400,000, the model will be released initially at 25 Datsun dealers in summer 2014. The company plans to expand its sales network to include 75 more dealers within two-year’s time.
 While Nissan’s Global Design Center designed the sedan, the vehicle’s development was the work of AVTOVAZ’s engineering team in Russia. The sedan will be built at the AVTOVAZ’s plant in Togliatti, and will share the same platform as AVTOVAZ’s next-generation of the Lada Kalina. The company will try to leverage as many local parts suppliers as possible, in order to maximize the vehicle’s local procurement ratio. With the weak valuation of the ruble against other currencies, European automakers that heavily rely on importing both finished vehicles and car parts from Europe into Russia are currently at a disadvantage. On the other hand, since Renault-Nissan has localized its production operations in the country, the company fortunately is in a very advantageous position. 
 Nissan will launch Datsun vehicles in the summer of 2014, aiming to sell 100,000 units annually in two years. Nissan plans to triple the sales volume of 155,000 Nissan cars it sold in Russia in 2013, and is working to increase its current 5.4% market share to 10%. Furthermore, plans call for the Renault-Nissan-AVTOVAZ Alliance to increase the 30% market share in 2013, to 40%.  

 

 



South Africa:  Datsun Cars to be released by end of 2014

 Nissan assumes South African market for low-priced vehicles has potential to grow, due to the expanding middle class. It plans to launch Datsun passenger cars by the end of 2014 in the country. Nissan will  import all the Datsun-brand vehicles  from India. It also plans to set sticker prices at either JPY 1 million or even lower. Once Nissan establishes its footprint in the country, it plans to add other new versions to its lineup. Nissan sold 50,000 units in 2012, and 47,000 units in 2013 in South Africa.
 Nissan’s local plant in Rosslyn, South Africa, has an annual production capacity of 50,000 units as of August 2012. Nissan announced that the capacity will be doubled to 100,000 units in 2016. It also plans to add production of small-size pickup trucks at the plant.

<Automotive Industry Portal MarkLines>