Covid-19 effect: Delay to 'game-changer SUV' puts Nissan India in a spot

Nissan officials declined to answer specifics on the strategy for the Indian market, saying they would be having a global meeting on their business plans later this month
The India unit of Japanese carmaker Nissan, which sells one in nine cars worldwide, will have to wait for the environment to stabilise before it launches much awaited compact SUV, something that will be a bitter pill to swallow given the company has not had a single blockbuster hit since its launch in India in 2005.  

Over the years, Nissan Motor India, a part of the Renault-Nissan-Mitsubishi alliance, has launched several cars, such as the X-Trail, Teana, Sunny, Terrano, and the small car Micra among others, but none of them has become a bona fide “hit” that could carry the company for several years.

In 2019, domestic volumes were at 18,000 units a year, with exports being at least four times that number making the subcontinent an export platform for the company. In contrast, Ford India sold 73,636 cars last year and Volkswagen Passenger Cars around 32,324 cars. 

The new sub-four meter sports utility vehicle (SUV) derived from the Nissan Magnite, which was expected to be launched this summer, is delayed(delete-indefinitely), and may throw a spanner in the works for the company’s comeback strategy this year. 

As of now, Nissan sells only one car that it makes in the Indian market. Other than the Rs 2-crore plus GT-R Sports Car that is completely built unit (CBU), the Nissan Kicks is now BS-VI ready and is being re-launched as of press time. Other cars, such as the Renault Duster-equivalent the Nissan Terrano, the Renault Scala-equivalent the Nissan Sunny, and the Micra, have all been permanently discontinued because the company did not see viability in incurring BS-VI costs.  

Despite having a strong portfolio of products globally, Nissan’s India product strategy, since its foray into Indian automotive market, has been its biggest challenge, said Suraj Ghosh, principal analyst, powertrain and compliance forecasts, IHS Markit. 

Nissan officials declined to answer specifics on the strategy for the Indian market, saying they would be having a global meeting on their business plans later this month.

"Nissan will announce a revised midterm plan with fiscal year 2019 financial results on May 28. We do not have any further comments on this subject," the firm said.

 
Just two months ago, the company announced that it would close its factory in Indonesia that makes Datsun-badged cars, around six months after it had closed the factory that made Nissans in the same country. The indication is that they will not continue to support operations that are not making profits.  

“Other global original equipment manufacturers (OEMs), who had similar slow starts, are readying their revamped strategies for India, be it the Volkswagen Group with its Vision 2.0 strategy, Ford’s alliance with Mahindra or Toyota’s alliance with Suzuki,” said Ghosh.

"The impression is that Nissan is somehow unable to stick to one strategy and it’s under immense competitive pressure,” he added.

Datsun, Nissan’s sub-brand portfolio of which includes the small car models the Go and the Go+ and the redi-Go, may also come under pressure. 

In addition, weak global performance and the recent announcements of restructuring are only going to make the game harder on Nissan's India operations. Presently, the company has resumed business operations as per local guidelines at its RNAIPL (Renault Nissan Alliance)  manufacturing plant.  

“It is likely that Datsun may be shut down worldwide, because the brand never took off anywhere. The entire idea of the Datsun revival was conceived of by the group’s former boss Carlos Ghosn, and there is a sense that present management doesn’t see a future in it for multiple reasons that include low sales numbers," said Gautam Sen, Paris-based automotive author and journalist.


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