‘We are in India because we have big aspirations.’

In the Autocar-Bloomberg TV India ‘CEO On The Drive’ series, Kenichiro Yomura, president, Nissan India Operations, and MD & CEO, Nissan Motor India, speaks to Hormazd Sorabjee on the challenge of bringing in Datsun, the Indian market and efforts to improve customer service.

What is your view on the Indian market and what are the challenges?
Nissan came to India with aspirations to grow in the market and become a key player here. But India is not an easy market, it’s very diverse and has demanding customers but we are adjusting ourselves to the tastes of Indian customers.
Since I took over in April 2013, market trends have not been in our favour but we see big opportunities over the long term.

You started off pretty well with the Micra and with the Sunny but then the numbers have gone down. What do you think went wrong?
We need to be consistent in our marketing efforts and, most importantly, the security of our assets and our network for customer satisfaction. We changed our distribution structure and are trying to do much better than before.

In hindsight, was it a mistake to outsource your distribution network to Hover and did it hurt your growth in India?
It did hurt our growth but I wouldn’t say it was a mistake. A decision was taken to start business quickly by using the third party and we follow a similar model of independent distributors in other countries but ultimately, we had to change the model. We have had successes with this model in the Middle East, for example, there are some failures too.

What is the current state of your distribution network and do you have teething issues?
Nissan’s dealers deal directly with the company even if there is a third party distributor. We have taken over the 128 dealerships here and work directly with them. We are keeping the supplies and advertisements on. We have to ensure that customer service improves. Dealerships are our touch-points and we support dealers in their marketing activities.

Nissan has not really invested a lot in marketing its products, something Volkswagen did when it entered India. Do you think initially you could have spent more on marketing?
We need to spend more money, not for marketing but for more impact. We need to be consistent not only during a vehicle launch but also to support dealers and improve brand awareness.

The Datsun Go is selling 1,000 units a month and dropping. What’s the real issue with sales?
We cannot launch a new brand overnight. Datsun is a new brand in India but it’s known elsewhere. This is the second Nissan brand in India. We need to tell people about it, some people even think it’s a Chinese brand!

The sense one gets is that Nissan is not fully established in India, so to establish a second brand would be more of a challenge, isn’t it?
Yes and even in India, the Nissan brand only covers 50 percent of the market, the other 50 percent should be covered by Datsun. That is why we started the new brand.

Do you think there is a bit of confusion between the products, the Micra Active is aggressively priced and close to the Datsun Go’s price?
For us, both the Nissan and Datsun brands are different as also their target customers. The Micra Active and Datsun Go are designed for different buyers. There is some borderline so maybe one can say it’s cannibalisation but this could be a synergy by giving a wider range of selection to the customers.

Is there a case for separating Nissan and Datsun with separate outlets, especially in smaller towns?
Ideally, it’s better to separate the dealership networks. We aiming for that maybe in mid-to long-term but right now we have only one product and 128 dealerships nationwide, so why not utilise the service workshops as well for the Datsun brand?

So once more products are added in the Datsun range, you could look at separate Datsun dealerships?
Yes. Also, some dealers have built Datsun exclusive showrooms already. We have a Mumbai showroom that has both Nissan and Datsun and you can see the Datsun Go there but in other smaller cities, we will have separate dealerships.

With the Datsun Go customer, the target was 80 percent first-time buyers but that hasn’t probably happened. What is the strategy to target them?
Datsun does not have many smaller-town customers but in big cities there are many. We have found that first-time buyers are more cautious in their buying decisions. We are, therefore, trying to reach out to first-time buyers through advertisements in local newspapers. The digital medium is good as well but we need to establish brand awareness and opinion for the Datsun brand overall for those first-time buyers. They will then be more relaxed to take this decision.

So word-of-mouth is the most important decision making tool and Maruti rules in this, doesn’t it?
Maruti is a big guy, we are still a young baby. Nissan is a small pie of the market right now.

How would you tackle the challenge at the bottom end of the market?
There is no magic in sales activities, especially sales and service. We have to be consistent and diligent to build up the Datsun brand.

The Redi-Go concept, which is smaller than the Go, was displayed at the Auto Expo. Will you have to change your strategy and what are the lessons learnt from the Go?
Our next product is the Datsun Go+, a derivative of the Go that will debut this fiscal. We displayed the Redi-Go concept at the Auto Expo and that could be the third model. I think the Go and the Go+ and this new model will be good for the critical mass and to build the Datsun brand.

So Nissan and Datsun are prepared to stick it out at the lower end of the segment where right now things haven’t been good for you but you aren’t giving up on that?
We have to really diligent and consistent, and continue with our best efforts to be successful.

As regards Nissan, there has been talk on SUVs such as Terrano which has done well but it’s not really a Nissan product. So is the SUV segment going to be one of the pillars for Nissan in India?
Nissan has a good reputation in the SUV segment especially in Middle East and the USA. We are looking at what we can bring to India because SUVs are aspirational here.

Nissan has some models built for Europe and global markets but the cost structures for India would be a challenge, wouldn't it?
Yes. Price and volume are always different.

You haven’t also looked at the sub-four-metre segment. What’s your take on this segment and is it difficult to design the car just for one market?
We are looking at other opportunities as well. If our product is just for India, it is very difficult to come up with a solution but we are working on it.

Do you think the sedan market is good as well for you?
The segment is also an aspirational one and the Sunny is our core model. We may consider a range of sedans which is ideal but we need to
go one by one. We have five models already and want to see they do well in India. We are always looking at enriching our portfolio to grow in the Indian market.

Another model that you are trying to get back on track is the Evalia. Why is it doing such low numbers?
The Evalia is a good model – it has got huge interiors, it is fuel efficient and has good ease of entry and exit due to its sliding doors. We have just improved some of the things in the Evalia in the latest version. So it’s a much better car for Indian customers.

The MPV segment is a lot less emotional, buyers are cautious and word-of-mouth critical. Is it a challenge taking on the Innova?
It is a challenge because Nissan is still a new brand. Maruti has been here for 30 years and Toyota has been in India much longer than us. So we are enjoying their challenges.

One of your strengths is the capacity you have for Renault-Nissan that gives you a cost advantage but how crucial are volumes in India, and are you relying on exports or local sales?
We are here because we have big aspirations, so volumes are crucial. We sell both export and domestic together but the domestic is always our focus. We export the Micra to Europe and the Sunny to the Middle East and that’s very crucial for us to utilise capacity and keep our vehicles competitive for India.