A few days ago, Bloomberg reported that Nissan’s recently relaunched low-cost Datsun brand was failing in India, as consumers would be reluctant to spend their money on cars that have an image of being cheap, a similar problem that has plagued the Tata Nano. I think this article is a bit of an easy shot at Carlos Ghosn, CEO of the Renault-Nissan Group, who’s known for his bold and ambitious goals, but who hardly fails to deliver on his targets. This makes him a sitting duck for journalists as soon as they can smell even a hiccup in his plans.
Focus on India
For one, the article focuses exclusively on India, which is the hardest market to crack, something Volkswagen has experienced as well. Local producer Maruti controls over 45% of the car market and therefore achieves great economies of scale and excellent brand recognition. Hyundai locks in another 16% of the market, which leaves the remaining 12 automakers, among which two other local brands Mahindra and Tata, to divide a pie of less than 800.000 annual sales among each other. Introducing a new brand in any market is not a short-term project, perhaps even less so in India, and Ghosn has understood that. With average car ownership still extremely low in India, Ghosn has been quoted to say “the risk is to do nothing” and to miss out on the enormous growth potential of this market in the future. [Read more…]