Ammar Master, Senior Manager, Asia Pacific Vehicle Forecasts
15 August 2019
15 August 2019
Nissan cost-cutting: Impact on India
The direct impact of Nissan’s global cost-cutting measures on India is the loss of 1,700 jobs. This represents 14% of the automaker’s total global headcount cull, but, more importantly, India will suffer the highest number of job cuts amongst the markets for which specific numbers are available.
Without doubt, the Nissan and Datsun brands have not performed well in India – even before the current slowdown in the market. Increasing competition from the market leaders and a lack of new products from Nissan and Datsun have dampened sales for both brands.
This resulted in their combined market share of the Passenger Vehicle segment sinking from 2% in 2016 to 1% in 2018. In H1 2019, combined sales for Nissan and Datsun collapsed by 42% year-on-year.
“Competing head-on against the might of Maruti-Suzuki, as well as Hyundai, to win these buyers was a monumental task from the outset”
Nissan had hoped that the revival of the Datsun brand would challenge Maruti-Suzuki in the entry-level segment, but the strategy proved to be unsuccessful. Competing head-on against the might of Maruti-Suzuki, as well as Hyundai, to win these buyers was a monumental task from the outset.
Datsun’s failure to quickly design and develop more products also meant that its limited range of just three models was far too inadequate to battle against bigger and more entrenched rivals like Maruti-Suzuki and Hyundai.
Furthermore, Datsun’s attempts to convey itself as an ‘affordable’ brand through aggressive marketing campaigns failed to convince India’s status-conscious, entry-level car buyers. Instead, Datsun was perceived as a low-cost brand, positioned below Nissan, which kept many buyers away.
“The lack of focus on the Nissan brand meant that it, too, did not receive much-needed product updates”
And while Datsun was being established, the lack of focus on the Nissan brand meant that it, too, did not receive much-needed product updates, especially for the aged Micra and Sunny. The recent launch of the Kicks, meanwhile, has attracted very little buyer interest.
Both brands also suffered from changes in the top management, coupled with weak sales and marketing strategies.
The biggest worry is that Nissan’s cost and product rationalisation means that product updates and/or expansion in India may be delayed further, thus putting more pressure on the company to at least sustain market share, albeit it a miniscule one. New investments in the Indian operation over the medium (and even long) term are also out of the question for the time being.