The market performance of the Magnite will determine the global OEM’s future in India. The company hasn’t hinted at any other project, under Nissan or Datsun brand, in the pipeline for India.
25 Aug 2020 | 17863 Views | By Sumantra B Barooah
Japanese car major Nissan has departed from its earlier business growth strategy of aggressive moves in terms of entering markets, and setting up manufacturing plants globally. In its reworked plans, ‘regionalisation’ takes precedence over globalisation.
“When it comes to regionalisation, economy of scale does not run the business. It ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
Japanese car major Nissan has departed from its earlier business growth strategy of aggressive moves in terms of entering markets, and setting up manufacturing plants globally. In its reworked plans, ‘regionalisation’ takes precedence over globalisation.
“When it comes to regionalisation, economy of scale does not run the business. It is the value we create, which the customer is willing to pay for, which drives the business,” Ashwani Gupta, COO, Nissan Motor Corporation tells Autocar Professional. The OEM, which started its India journey in 2005, has been struggling to gain a firm foothold in the “tough” Indian passenger vehicle market.
Citing the example of Nissan’s Propilot Assist system, an autonomous driving feature for slow moving traffic or highway use in single lane traffic, offered in the Skyline GT-R as well as the small ‘Kei’ car in Japan, Gupta says that such value additions can be dealmakers in challenging times when customers are hard to find. And to find a good number of customers in India, Nissan is trying to find out what kind of value will attract the Indian customer to its cars.
“When it comes to India also, we have to identify that value which will be recognised by the customer, to drive the business,” says Gupta. It won’t be surprising if Nissan’s next model, the Magnite SUV, scheduled for a January 2021 launch, will offer that special value proposition. The market performance of the Magnite will determine the global OEM’s future in India. The company hasn’t hinted at any other project, under Nissan or Datsun brand, in the pipeline for India.
Scaling down operations globally but not in India
Even though Nissan hasn’t seen a long stretch of strong market performance, Gupta says the OEM is not scaling down Indian operations. In order to enhance its financial performance and secure a sustainable future, Nissan is downsizing its global production and market presence. By FY2023, the company plans to reduce its cumulative production capacity from the current 7.2 million units to 5.4 million units. Lesser than expected growth of many markets is also a key reason for scaling down operations. “If we want to be profitable we need to align our capacity with our realistic sales figure, which is 5.4 million. So, that’s how we downsized from 7.2 million to 5.4 million,” says Gupta. By 2023, he expects the global TIV to be at 90 million units. That would mean a 6 percent market share for Nissan.
In Nissan’s recently reworked mid-term plan, USA, China and Japan get all the attention as 80 percent of the OEM’s business currently come from these markets. Gupta stresses however that doesn’t indicate any preference of customers. “In Nissan Next, we did say that USA, China, Japan are our core markets from the weight of our business allocation but that has nothing to do with the customer allocation. For us, the customer who buys a Nissan in India is the same with the customer who buys a Nissan in the United States, because from a customer viewpoint they use their disposable income to buy a car but from our viewpoint we have to have business allocation,” he says. Nissan has a market share of over 10 percent in its home market, 6-7 percent in USA and brand Nissan in China has a market share of over 10 percent. In India, it’s yet a marginal player.
Nissan’s market performance in India has been much below expectations so far. However, its engineering and R&D operations at Renault Nissan Technology and Business Centre along with alliance partner Renault has exceeded its own expectations. “RNTBCI is doing much more than we thought. When we established RNTBCI we thought of only 2,000 engineers, and today we are close to 10,000, because we are not using RNTBCI as a back office. RNTBCI for us is one of our head offices. And the connected services, which is one of the main pillars of CASE (Connected, Autonomous, Shared, Electrification) and these software are developed by RNTBCI. So, they are part of our global R&D team for some of the projects,” says Gupta.
As technologies get more advanced and complex, more projects may come for the Indian R&D team. “We do believe that moving forward when we are moving towards the advanced technologies, specially the advanced research, we are going to use RNTBCI more and more,” says Gupta. But for now, his core focus is on building on the signs of improvement that he says has been witnessed during the current financial year, stabilising operations and ensuring profitability of the 86-year-old OEM.