How Nissan plans to take on Tata Nano

Japanese auto major Nissan Motor Company on Monday unveiled the Datsun Go, the first of the line of vehicles under the resurrected ‘Datsun’ brand.

Nissan’s executive vice-president and CEO Carlos Ghosn’s key man for his new strategy in emerging markets, Andy Palmer, tells Business Standard how the Tata Nano’s experience made his company steer away from the $2,500 car.

He also speaks about how Nissan’s association with Bajaj Auto to develop a small car failed, making his company place its bets on the Datsun brand to grow its market share 10-fold over the next three years.

Click NEXT to read the edited excerpts:

Carlos Ghosn had earlier envisaged developing an ultra-low-cost car with a $2,500 price tag to bring affordable mobility solutions to the masses. What made Nissan re-think the strategy?

Your strategy is as good as your first experience.

We learnt from the Nano experience.

The car you see today is the first -- but not the final -- in the entry segment.

We have not reneged our intentions to go into the low-price market.

The Micra starts at Rs 350,000.

The Datsun, on an average, will play below that with many cars. But I don’t think we will go to the Rs 100,000-150,000 bracket.

There is an interesting market above that which we can address.

. . .

Why did your deal with Bajaj to make a low-cost car fail? Will you get into the quadricycles market?

The Bajaj deal is over.

Our reason for not pursuing the arrangement was that we are a car company; we cannot be defined by a four-wheeler.

Cars have a lot of safety features and are aspirational products.

We are not interested in quadricycles.

India is a country of youth and a significant portion of its rising middle class is aged below 35 years.

In our opinion, people are not aspiring to buy a cheap motor car.

They are looking for a product that will represent their position in society.

They need an entry-car to be reliable and trustworthy.

Datsun is all about trust.

You need to earn that trust.

When one sees the scenario of all other ultra-low-cost cars, one has to question their reliability.

. . .

To meet your price levels, you need to localise very heavily. Have you done that?

The Datsun Go will be close to 100 per cent localised.

To reach the price levels we are talking about, it has to be locally manufactured in India, Indonesia and Russia.

We are not 100 per cent local content -- some parts will be passed via other countries -- but we will be as close to 100 per cent indigenisation levels as possible.

The Micra is 94 per cent localised; the Evalia is 85 per cent.

Why is it that you did not badge the new product as Nissan and went for a different brand in Datsun? Did you think these products will dilute your Nissan brand?

The origin of any brand is ownership and trust.

The only reason for having a different brand is that we are making a slightly different promise with Datsun.

Nissan cars go all the way up to $130,000 from $5,800 (Micra at Rs 3.5 lakh).

Nissan stands for leading edge in innovation and will create excitement.

It has a tendency to be price premium.

This is not compatible with the Datsun goal, which is fulfilling dreams of personal mobility.

But that does not mean in any way that it is a low-quality brand.

Everyone knows Datsun is Nissan.

We had the brand for 50 years. In India, Datsun cars will be sold through Nissan dealers.

. . .

To meet your price levels, you need to localise very heavily. Have you done that?

The Datsun Go will be close to 100 per cent localised.

To reach the price levels we are talking about, it has to be locally manufactured in India, Indonesia and Russia.

We are not 100 per cent local content -- some parts will be passed via other countries -- but we will be as close to 100 per cent indigenisation levels as possible.

The Micra is 94 per cent localised; the Evalia is 85 per cent.

Why is it that you did not badge the new product as Nissan and went for a different brand in Datsun? Did you think these products will dilute your Nissan brand?

The origin of any brand is ownership and trust.

The only reason for having a different brand is that we are making a slightly different promise with Datsun.

Nissan cars go all the way up to $130,000 from $5,800 (Micra at Rs 3.5 lakh).

Nissan stands for leading edge in innovation and will create excitement.

It has a tendency to be price premium.

This is not compatible with the Datsun goal, which is fulfilling dreams of personal mobility.

But that does not mean in any way that it is a low-quality brand.

Everyone knows Datsun is Nissan.

We had the brand for 50 years. In India, Datsun cars will be sold through Nissan dealers.

. . .

Do you need to add capacity as you are looking at launching ten new products by 2016?

In August, we increased our capacity to 400,000 units.

We expect to sell more cars in India.

We were relatively late in entering the market.

We set up an international hub to derive economies of scale by utilising our capacity well.

But, ultimately, we expect the Chennai unit to be the principal plant for India.

The proportion of domestic sales and exports (it exported around 99,000 cars last year) is changing.

Are you going to use a new platform for Datsun cars?

The Datsun cars are brand-new models. I don’t think Indian public deserve old models. India is a key market for us.