Nissan Motor’s decision to pull the plug on production of the Datsun in India was not entirely surprising.
This was waiting to happen since it was now a foregone conclusion that the brand was not living up to its potential in other emerging markets like Indonesia and Russia either. Beyond this, lay the reality that an already stressed Nissan just could not afford to sustain a loss-making brand like Datsun any longer especially when it had to put its house in order quickly.
In a way, the death of Datsun — dramatic as it may sound — is yet another nail in the coffin for the Carlos Ghosn legacy. It was his brainwave to revive Datsun, albeit in a completely different avatar, as the accessible car brand for markets like India, Russia, Brazil, Indonesia and South Africa.
Ghosn was absolutely right in his reading that people in these regions needed affordable mobility and it therefore made sense to have a product that would fit their needs. The former CEO of Renault-Nissan was obsessed with the idea of frugal engineering and the need to serve up something appropriate in emerging markets which had tremendous potential but with lower per capita incomes.
A car for the masses
It was also in this context that Ghosn was absolutely impressed with what the Tata Nano had achieved in terms of its costing structure and the Rs 1,00,000 publicity campaign even before its unveiling at the 2008 Delhi Auto Expo had caught the attention of the world. When the covers were taken off the people’s car at the Expo, the crowd present there erupted into loud applause and literally went berserk applauding the effort.
Ghosn respected the fact that Tata Motors had shown the way in keeping costs in check as part of the endeavour to produce an affordable car for the masses. Never mind that things did not eventually work according to plan because the public also wanted something that would not be confused with ‘cheap’. It was here that the Nano failed and so did Datsun which only served as a grim reminder that striking the balance between affordability and aspiration was not always the easy thing to achieve.
But then we are moving ahead of the story. This was still 2008 where the Nano was the flavour of the season and Ghosn wanted to replicate something as dramatic on the pricing front. It was this urge that led him to forge an alliance for Renault-Nissan along with Bajaj Auto to work on the ULCC (ultra-low-cost car) with a price tag of around Rs 1,50,000.
It was not as if India had not got a people’s car yet — the Maruti 800 had already created history way back in the 1980s and its successor, Alto, was another worthy occupant of the throne. However, the bigger challenge was to get two-wheeler riders to graduate to an affordable car and this is where the price differential was still considerable.
It was in his humongous gap that Tata Motors wanted to fit in the Nano and what Ghosn wanted with the ULCC with Bajaj Auto. Sadly though, neither really worked according to plan. The Nano was caught in the crossfire of a bitter political slugfest on its location and eventually had to be transplanted from West Bengal to Gujarat.
Valuable time was lost in the process and the Tata car also suffered from the perception of being cheap. This was something that buyers were not comfortable with and for a two-wheeler rider, the association with a Hero Honda was far more satisfying than a Nano for instance.
By the end of the day, people like their neighbours to take notice of their prized possession but this oomph factor was missing in the Nano. As numbers gradually dwindled, the company still persisted with its production but clearly it was for a lost cause and the time finally came to give a burial to a brand that promised plenty but fell along the wayside. The Nano deserved better but it had started off on the wrong foot where the affordability USP ended up becoming a millstone around its neck.
In the case of the ULCC, it became increasingly apparent that the project was not going on the desired lines. Bajaj Auto finally decided to follow its own course and make the quadricycle while the Renault-Nissan combine had different ideas about what it needed in an affordable car.
It was this renewed thinking which prompted the French carmaker to work on the Kwid and offer it as its entry-level model. By this time, of course, there was no question of offering a model at ludicrously low price tags of Rs 1,00,000 - 2,00,000. Manufacturers realised this was not tenable and it made more sense to look at the region of Rs 2,50,000 - 3,00,000.
Effectively, this meant participating in the Alto segment and holding out against a brand that was better established with a loyal customer base. This was precisely what Renault did with Kwid which was launched at a price of less than Rs 2,60,000 and continues to be around today.
In the case of Datsun, the reasoning was that there was a need to develop a global brand that would satiate the needs of customers in India and beyond. Ghosn’s energy was infectious and there was a lot of excitement all around with this new strategy. Today, he may be leading a fugitive’s life in Beirut but in his heyday, the Renault-Nissan CEO was the monarch of all he surveyed.
Ghosn was also bullish on India’s role for Datsun when the big bang announcement on its entry was made in Delhi back in 2013. A top official had then told this writer,“India is probably the most competitive country in the world for the automotive industry. It does not cover 100 per cent of technology or components required to make a car but it is giving a good 97 per cent.”
Of this (97 per cent), India was the cheapest, or the second cheapest, globally for at least “80-85 per cent”. It was this strength that Nissan expected to draw upon as it embarked upon its most ambitious car project a decade ago.
Datsun was targeted at the new emerging middle class. “We want to stay focused on four countries (India, Russia, Indonesia and South Africa) initially and make this project a reality. Of course, we will go beyond that because the emerging new middle-class will hopefully happen in many places,” said the official.
India was positioned as a critical pivot in this global drive since it was home to Nissan’s biggest engineering centre (in Chennai) outside of Japan. which meant the company would “try to reap the benefits and use this knowledge”.
India, he added, was “fundamentally the winner of tomorrow” because the mindset of its people was a combination of development and respect for limited resources. Terming this a “fantastic tool”, it also put in perspective why Datsun was developed in Chennai and not Japan.
Yet, the Datsun story did not go off on the desired lines since the time of its India launch in 2014 and the top management agreed that more needed to be done for the brand. During an event in Yokohama, they said it had received “varying degrees of success” across markets. “We have started to get some traction though the speed varies from market to market,” one of them said.
Nissan officials in Japan admitted during the event that the company needed to perhaps make a “little more noise to get attention”. While they were reasonably confident that Datsun had the potential to grow, this was going to take longer than what the company had first envisaged.
“We have the right products in the right markets but just need to work hard and get the momentum. People in India want value-for-money and not anything cheap. We are learning something new everyday,” said an executive.
Where Datsun had first made a connect with customers in the 40 plus age group, the challenge was to reach out to those in their mid-20s who were ready to loosen their purse strings for an attractive car brand. “Everything we do in life is half empty and half full. We could have done worse and my belief is you can keep improving. If you do not learn, you will die in this industry,” a top official said at Yokohama.
It was now a given that Datsun would have to go beyond its four targeted markets to the ASEAN region with Indonesia possibly as the nodal plant. Thanks to free trade pacts, shipments could be conceived to markets like the Philippines and Myanmar. India could, in its turn, double up as the feeder to Africa, Latin America and the Gulf.
With lessons now learnt from the debacle of the Datsun GO and GO +, Nissan was confident about the redi-GO which was launched at a starting price of nearly Rs 2,50,000 six years ago. The Japanese automaker was hopeful that the value package would appeal to customers.
“If you look at its design, space, safety and then the price, it puts things in a larger context. The strategy was to offer maximum value,” a top company executive told this writer then. The redi-GO’s brand building effort focused on youngsters, lifestyle, self-assurance and a spirit of freedom.
The executive admitted that Datsun was not on top-of-mind recall and even if a group of potential buyers has Rs 2,50,000 each to spend on a car, only 15 per cent would think of this brand. “We therefore need to focus on good advertising and spread the word about this Japanese brand that has launched a car at this price. We know that this price will help us become extremely competitive and we can accelerate the growth of the market,” he said.
The executive also conceded that the going would not be easy for redi-GO since a lot of people would opt for a well established brand in this price segment, a clear reference to the Maruti Alto. The challenge, therefore, was to show that a “new tradition is possible” by way of an alternative like the redi-GO.
According to him, customers in India saw Datsun as a brand akin to a startup with a lot of energy and movement. “People believe in us and yet wonder what we are up to which makes the startup analogy appropriate,” he said. Clearly, none of these well-intended objectives have materialised and Datsun has now bid adieu.