Datsun’s global head tells Sumantra B Barooah the Go will match or better other entry level cars in terms of total cost of ownership.
19 Mar 2014 | 2798 Views | By Sumantra B Barooah
Vincent Cobee, Datsun’s global head, tells Sumantra B Barooah the Go will match or better other entry level cars in India in terms of total cost of ownership.
What are the three things being done for the first time at Nissan to make the Datsun strategy a success? ...
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Vincent Cobee, Datsun’s global head, tells Sumantra B Barooah the Go will match or better other entry level cars in India in terms of total cost of ownership.
What are the three things being done for the first time at Nissan to make the Datsun strategy a success?
The first thing is to focus on a limited number of markets and go customer first, which means you start with India, Indonesia, Russia and ask, “Who is my ideal customer? Who is this emerging middle class? What does he or she want?”A five-door hatchback is a mainstream product in India, a seven-seat MPV in Indonesia, and something else in Russia. What kind of price? What kind of roominess? What would be an attractive innovation from a product point of view? Is it size? Is it fuel economy? What is it? We say we will deliver on that, then work on the technical solution with the obsession of that customer and that country and nobody else and no other country.
Compared to a global carmaker and a global brand with global products like Nissan, which tends to optimise global demand and define across countries the type of product with great success, the Datsun approach says: “I am focused on one customer, one country and I will do the best thing for that person.” Sometimes we can find technical synergies between two demands as we did between India and Indonesia but we were extremely focused.
The second thing to say is, “You can only do that with this amount of market understanding, with this amount of cost challenge, with this amount of content versus price.” To harness the power of local engineering and manufacturing, we decided not to develop this car in Japan at all. It was not that we had a team in Japan and labour was outsourced. No. The entire development was done here. The chief vehicle engineer, the chief purchase person, and the chief manufacturing person are all here in India. Of course, we will pick up the phone if they need any expertise (from Japan). This is the first time that a chief vehicle engineer of Nissan Motor Company is not based in Japan.
The third thing, looking forward, is that there’s an interesting aspect of our customer, which is this ‘riser’. A very strong tension between high aspirations, high dreams, new family, new job, having children, moving around and so on. Also, a fairly worried situation financially and lack of prior experience in car ownership – “Will I be able to make the right choice?, Will I be able to afford the car?” That tension is part of the product development as well as the sales experience. We need to be very cognisant. Corporate communication is not the only way, it may not be the right way. As a different way versus the traditional Nissan way is how we decided to go first by exposing the car to the customer. As you know, in India, we are going to a hundred cities and we are showing the car in shopping malls, not dealerships. We are demonstrating the car, spending time with customers, taking hand raisers’ information if they wish because kicking the tyres, getting accustomed to the car is extremely important for my customer. This is the departure from the Nissan brand customer and the usual ways at Nissan Motor Company.
Addressing the apprehension in the mind of a first-time car buyer, things can get more challenging if you have well-established competitors like Suzuki and Hyundai in the Indian market. How do you address that?
What it means is that we need to present the car in many places. Hence, the 100-city road show. We will continue doing that and expand it. We need to have a substantial geographical coverage with our dealer network. We will be of a similar size of Nissan which has over 100 dealers today that will triple over the next three years.
We also need to be very focused on the cost-sales experience. For this, we will develop a number of ad-hoc services, helping customers feel closer to the dealerships. We can think about various mobile solutions to bridge that gap. Also, you look at the soft side by having an emotional contact, personalisation and sales finance. A number of approaches like this to remove the anxiety or bring a new product into the radar screen of customers who till now didn’t have this luxury of choice.
Aftersales support and resale value play really key roles in the success of any product, more so in the case of a new entrant. What have you done to ensure that the Go is at par, or better, than other entry level cars in these parameters?
Your point is extremely correct and there’s another aspect of this difficult Indian customer – the level of smartness. People can be enthused by the styling of a car but at the end of the day it is both an emotional and a very rational purchase. You need to be able to tick all the boxes. You need to be able to demonstrate that this is the right investment. This is not an expense but an investment.
So, what we have done is worked on a new concept of TCO (total cost of ownership). It’s not only the price you pay for the car and the fuel economy but also the routine maintenance, the insurance premium. We want to make sure that this is the same or better than the competition even if their cars are smaller, their engines are smaller, even of their performance is nowhere close or the roominess is nowhere close.
We still want to be at par in terms of the cost of ownership. So, obviously, we worked on fuel economy. We also worked on parts pricing, service intervals, labour cost, on oil cost. We have been detailed in making sure that it’s an investment which pays back. When you talk about resale value, the best way to protect resale value is fair pricing, to not have people guessing “Am I buying it at the right price?” No, you will buy it at the right price because we will offer it at a fair price.
Are you confident that Datsun will score over its rivals in the parameters of TCO?
No, you should not be overly confident in the car industry. We are working hard in studying the best we can and making sure that our objective is to be same or better. The customer will be the judge. It’s for the first time that the chief vehicle engineer of a new project is based outside Japan.
But the Go still shares some assets with another model from Nissan. Could there be a day when a ground-up Datsun project is done in India?
To be clear, this is not a body derivative of an existing car. It shares assets but even the platform is a modification. Every chassis part is a modification because we wanted to be extremely focused on the Indian demand. The level of engineering which goes into this is as close as it gets to a full car development.
Most of the cars we develop in Japan are of a similar type of evolution. We never start from a white sheet of paper on each and every part. We reuse engines and components. So, for me the performance this team has done, I have to say, is of an amazing level. It is to the level of what we regularly do in Japan, nothing short of that. We currently expect the quality of the Datsun Go to be the best the Oragadam plant has ever produced. This is a very strong statement because this plant exports to a hundred markets and manufactures 9 or 10 different products today. The model works. But it is hard work.
Talking about the Oragadam plant, you have set aside a capacity of around 110,000 units for the Datsun Go, isn’t it?
We have not shared an exact number. What we have shared is the current capacity of the Oragadam plant is 400,000 units per year. Last year we made around 220,000 or something like that. So, we have spare capacity. The current line where the Datsun Go is produced works on two shifts. We probably will move to three shifts somewhere this year. And we also know that we have a potential to move to produce 480,000 units a year by adjusting the shift patterns. So, we are ready to absorb the expected great result of the Datsun Go.
Could Oragadam also be the export hub for the Go, like in the case of other Nissan models? You told us earlier that Datsuns could be sold in 40-50 countries worldwide.
I said that and it is correct. Datsun Go is made in Oragadam for the Indian market. We should also realise that two things are fantastic here. This is one of the most demanding customers you can find. If you can satisfy the Indian customer, you can satisfy many markets. This is also one of the most competitive car markets, in terms of production. So, the quality and cost of manufacturing cars in India is one of the best in the world. So, if you combine those two things naturally, if you do a successful car for the Indian market you buy yourself export opportunities. Now, Datsun Go is made for this market. We might find export opportunities. They will always remain a minority. But yes, it will happen.