Mumbai: New Delhi fashion designer Rebecca Nelson is the kind of customer Nissan Motor Co. aims to attract as it revives the Datsun brand: Someone on a budget looking to buy her first car. Problem is, she’s never heard the name.
What is Datsun? said the 26-year-old, who earns about $400 a month and takes the subway to work. If I’m spending my savings on a car, I’ll opt for a tried-and-tested brand.
Nissan is resurrecting the Datsun marque after killing it in 1981 in favour of the automaker’s namesake brand. Sold mostly in North America and Europe in the past, Datsuns were popular for their fuel economy during the 1970s oil shocks. Chief executive officer Carlos Ghosn is counting on updated technology at bargain prices to overcome the lack of brand recognition in emerging markets, where Datsun will be sold.
The first Datsun model—Nissan says it’s a hatchback and will cost significantly lower than Rs.4,00,000—will be unveiled in India this month and go on sale next year. Within two years, Nissan expects to introduce Datsun in Indonesia, Russia and South Africa. Sketches released by the automaker show a five-door hatchback with a hexagonal grille and swept-back headlights.
The new Datsun adds another leg to Ghosn’s strategy of competing in every segment in high-growth developing countries. Its role is to occupy the opposite end of the price spectrum from Nissan’s upscale Infiniti unit, which is undergoing a revamp to lure wealthy Chinese buyers.
“Nissan realised there is huge potential in emerging markets for which it needs more affordable models,” said Ammar Master, an analyst at LMC Automotive in Bangkok. “Without Datsun, the automaker will find it difficult to grow fast in emerging markets.”
Datsun’s revival follows Ghosn’s $5 billion bet in 2009 on electric vehicles that so far has fallen short of targets. Nissan in January cut prices for its all-electric Leaf car after missing sales targets in the last two years.
“He has to pull some rabbits out of the hat,” said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, which manages about $3 billion in assets. “He hasn’t pulled out any for a long time. Has he no magic anymore?”
Nissan’s shares have risen 29% this year, trailing the 36% gain by the benchmark Topix index and Toyota Motor Corp.’s 56% advance. The automaker, which derives more of its sales from China than Toyota or Honda Motor Co., trailed its domestic competitors last year as a territorial dispute spurred consumers to turn away from Japanese brands.
In the US, Nissan notched record sales in June after cutting prices on seven models.
“In developing economies, such as India, Russia and Indonesia, Nissan doesn’t offer passenger vehicles in the lowest price ranges, which account for about 40% of the market,” Ghosn has said.
“Datsun will target first-time buyers upgrading from motorcycles or used cars, allowing the automaker to reach a new market segment,” Ghosn said in March 2012. “Reviving the Datsun name, even if it’s unfamiliar to consumers in emerging markets, beats starting a new brand in terms of customer recognition,” he said.
“The risk is to do nothing,” Ghosn said at the briefing announcing the brand’s comeback. “Datsun will house the automaker’s budget range to prevent the main Nissan brand, whose top-selling Altima sedan starts from $21,760 in the US, from going down-market,” he said.
Ghosn is adopting a similar strategy that Renault SA, which he also heads, used with the low-cost Dacia brand, which it bought in 1998 and is popular with budget buyers in Europe, said Master of LMC.
“Datsun will account for a third to half of total group sales in India, Indonesia and Russia by 2017,” said Roland Buerk, a spokesman at Nissan’s headquarters in Yokohama.
“Nissan will probably use older vehicle platforms for its Datsun models to cut costs,” said Kota Yuzawa, an auto analyst at Goldman Sachs Group Inc. in Tokyo. “And since Datsun can piggyback on Nissan’s dealer network, it doesn’t really require a lot of investment,” Yuzawa said.
“The automaker doesn’t comment on the specifics of future products,” said Chris Keeffe, a Nissan spokesman, adding that the newly developed Datsuns use state-of-the-art technologies, platform and components.
Datsun can expect stiff competition. There’s Maruti Suzuki India Ltd.’s Alto 800 and the Eon by South Korea’s Hyundai Motor Co., both of which cost less than $5,000. Nissan’s cheapest car in India now, the new Micra compact hatchback, costs about $5,800.
At least 10 other manufacturers, including Toyota Motor Corp., Ford Motor Co. and Volkswagen AG, also sell compacts and minicars, which accounted for about 75% of passenger-car deliveries in India last year, according to the Society of Indian Automobile Manufacturers.
In Indonesia, Toyota and affiliate Daihatsu Motor Co., accounted for about half of the passenger-vehicle market, according to researcher IHS Automotive.
Jakarta resident Arie Novarina, who rides a motorcycle to work, illustrates the difficulty Datsun will face. As she considers upgrading to a car, the 31-year-old said she’s most interested in a Toyota, and will only consider a Datsun if it’s easy to handle, gets good gas mileage, and—most important—is cheap.
“Datsun’s design looks cool,” Novarina said after viewing a sketch of the soon-to-be-released Datsun hatchback. But if it’s the same or similarly priced, then I’d choose Toyota.