In Rio Olympic campaign, Nissan makes its bet on Brazil’s recovery
Nissan paid about $250 million to sponsor the 2016 Rio Olympics, a campaign that highlights its recent investment in Brazil and a bet that the country’s economy is on the verge of recovery
Chicago/Sao Paulo: Like so many things in Rio de Janeiro, Carlos Ghosn’s turn in the Olympic Torch Relay on Friday didn’t go as planned. Ghosn, who is chief executive officer at both Nissan Motor Co. and Renault SA, was supposed to finish his 200-meter leg right in front of a Copacabana hotel covered bottom to top in advertisements for Nissan’s newest car.
The route changed and changed again. The arrival of the torch was delayed. Ghosn’s run was cut short, and when he walked to meet visiting reporters, security guards swarmed him. Take it easy, Ghosn said in the Portuguese of his native Porto Velho: “I’m Brazilian.”
For the 62-year-old Ghosn, the Rio Olympics are more than a homecoming. Nissan reportedly paid about $250 million to sponsor the games, a campaign that highlights its recent investment in Brazil and a brazen bet that the country’s battered economy is on the verge of recovery. When it does, Ghosn says, he wants Nissan and Renault in position to grow their combined market share by 50%.
“It looks like if we are not at the bottom, we are not very far from it,” Ghosn said after his leg of the relay. “Now is the time when you need to beef up your activity and communicate, especially when there’s a product offensive.”
Meet the Kicks
The company is using the Games to unveil a new compact sport utility vehicle, the first time any major automaker, Nissan included, has ever used Brazil to launch a model destined for a global market.
The CUV, called the Kicks, was conceived with the help of Nissan’s Rio design team with the congested, poorly maintained streets of many major Latin American cities in mind: It features high ground clearance, a narrow body and four on-board cameras to warn drivers of unseen hazards.
“Brazilian consumers saw us as a good Japanese brand, but lacking a local taste,” said Jose Roman, Nissan’s vice-president for Latin American marketing. In an effort to change that perception, the company has hired Brazilian celebrity Luciano Huck as pitchman, and the Kicks will be available with a two-tone finish, with a bright orange roof and a gray body.
Nissan hopes to sell 50,000 Kicks in Latin America in the next 12 months, Roman said. The price for a fully loaded model starts at about 85,000 reais ($26,850).
For now, Nissan will import the new CUVs from Mexico. Then the company plans to add production at its new 2.6 billion reais factory in Resende, an industrial town 100 miles northwest of Rio. The Brazilian push includes increasing the number of Nissan dealers in the country to 239, up 52% from its current level.
Nissan currently sells fewer cars in Latin America than Ford Motor Co. or General Motors Co. In Brazil, Nissan and Renault are expected to combine for 10.9% of sales in 2016, according to IHS Global Insight. Fiat Chrysler Automobiles NV last year opened its biggest factory worldwide in the Brazilian state of Pernambuco to build Jeeps. But Fiat still trails Chevrolet, which claimed 16.9% of the market in July.
Some of the factory investments were prompted by a new national automobile policy, which since 2012 has encouraged Brazilians to buy cars designed and built domestically. Then, as the economy plunged into recession, demand for those vehicles shrunk.
Brazilians bought 3.6 million cars and trucks in 2012, according to IHS. This year, they are expected to buy 1.9 million. The Southfield, Michigan-based market researcher predicts that by 2020, the market will grow to 3.1 million—still 14% less than the 2012 level.
The conditions have discouraged some of Nissan’s competitors. Honda Motor Co. said in March it won’t open its new $250 million assembly plant in Itirapina until Brazil’s economy recovers.
A long slog
For Nissan, it could take longer than Ghosn expects for the company investments to pay off. Combined Nissan and Renault production in the country should hit 298,000 in 2020, up about 28% from 232,445 this year, IHS analyst Stephanie Brinley said.
The company will have to fight other relative newcomers including Toyota Motor Corp. and Hyundai Motor Co., as all three try to edge out long-time players like Fiat Chrysler, GM and Volkswagen AG.
“As Nissan, we need to improve the awareness of the brand, which is obviously not the case for some of our competitors who are very well-established,” Ghosn said. “Participating in the Olympics is a good way to boost this awareness, particularly when you have new products and good things to tell the public.”
Rio residents and visitors will probably get the message. Fleets of Kicks drove behind the torch relay in each city, including a stop-off at the Nissan factory in Resende. The company also provided 4,200 cars and trucks to ferry athletes and dignitaries around Rio during the games. The Arena hotel on Copacabana Beach has been rebranded the Nissan Kicks Hotel. Displays in the Olympic venues promote future technologies like fuel cells and autonomous driving.
The company also introduced a campaign on TV and online featuring Huck, a high-profile Brazilian talk-show host. Most of it is typical, factory-tour stuff, but in one stunt, Huck whisked an unsuspecting 22-year-old Brazilian salesman out of the Rio airport to Japan, where they eat sushi, try to sell perfumed Brazilian panties on the streets of Tokyo, and eventually tour a Nissan factory.
“Nissan wants to promote itself all over Brazil as having been one of the companies that supported the country during its Olympic Games,” said Rick Burton, a Syracuse University sports management professor. “If in five years Nissan is one of the major brands that every Brazilian recognizes, they’ll look back and say this was money well spent.” Bloomberg
Editor's Picks »
- BofA-ML survey: Short EM equity second most crowded trade
- GST-led shift from informal to formal sector happening, but at a snail’s pace
- Uncertain earnings for agricultural input firms despite bountiful rains
- PVR pays a premium for south
- Tata Steel’s Q1 supports India push but investors enquire at what cost