Russia’s severe economic crisis may be bad news for car companies selling there, but Datsun – Nissan’s value brand for emerging markets – sees an export opportunity arising from the weak Russian currency.
Vincent Cobee, Corporate Vice President Datsun Business Unit, told just-auto at the Geneva Motor Show that the company is increasing exports from Russia to neighbours and is also looking beyond the CIS (former Soviet Union) countries for new opportunities.
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“The weak rouble presents an opportunity to be very competitive and we are considering exports of cars from Russia to markets where the cars made there can be sold,” he said. “The CIS states are a free-trade area and a given,” he said. In Russia, Datsun currently makes and sells two models, a sedan called on-Do and a hatchback called mi-Do. Cobee said that Datsun is now selling cars in Kazakhstan. “We have been selling there for two months. We are probably going to sell in Belarus. But we are also looking beyond the CIS area.”
Cobee also described the economic conditions in Russia as ‘atrocious’ and admitted that the original plan to introduce three Datsun models there in three years would be difficult to stick to. “It is probably not going to be within three years based on extraordinary conditions, but we remain committed to the Russian market and we will introduce a third model to Russia,” he said. “This is something we are actively developing.”
Datsun is also looking beyond South Africa for further sales in sub-Saharan Africa. “Besides South Africa, we are looking at other African RHD markets, in particular,” he said. “And we are selling cars in Nepal and there might be some other countries not far from there where we could be selling cars.”
Cobee also said that Iran is a ‘very interesting market’ that could double from the current level of almost a million units annually over the next three years. “It is obviously a market we should look at, but it is not a very easy market to have the right strategy for. Iranians seem to have Western European tastes and that extends to how their regulations are moving – for example, they are moving to Euro 5 emissions. It is the same for everyone; a difficult market to assess from a strategic viewpoint. If you are a global carmaker, getting to a much higher average transaction price – 20,000 dollars – from the current 10,000 dollars, is not going to be easy. It will take decades. I am a 7,000-8,000 dollar price carmaker, but I am not sold in Europe. What is the best starting point?”
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By GlobalDataCobee also described Datsun’s mission as one of serving an emerging middle-class in many populous countries around the world, who have been “vastly under-served” by the auto industry. “The auto industry was busy looking at Western Europe, North America and East Asia. We think it is a good opportunity to produce cars at the right price point and with the right level of content for these consumers. Mainstream volume makers may sell cars for an average 20,000 dollars per cars. There is an opportunity to make cars with a transaction level under 10,000.”
“It is an emotional purchase, maybe the first time they buy a car, a fascinating part of the market. After India we launched in Indonesia, then Russia, then South Africa. We have been launching the brand in smaller countries such as Nepal and Namibia. And we have been looking at launching in other markets that can be served by our existing manufacturing facilities.”
Cobee sees a mixed picture currently in Datsun’s main markets. “India is a bright spot, Russia has seen a big market contraction, South Africa is also a challenge, Indonesia is struggling to grow because of the global economy. And India is also challenging because of the market complexity. It is a very full plate of challenges in front of me, but it is a very fascinating exercise. “
“We have launched Datsun Go (five-door hatchback) and Go+ (five-door seven-seater MPV) in India. We have launched the Go in South Africa, the Go and Go+ in Indonesia. And in Russia, which is a different market with different needs, we have a sedan called on-Do and a hatchback called mi-Do.”
On the subject of the Indian car market and its long-term growth potential, Cobee was cautious. “If you look at GDP per capita, India is still in a transitional stage in terms of motorisation,” he said. “I believe there is, in terms of motorisation, 12-13 years of timeline between the explosion of the Chinese car market and a similar explosion of demand in India. The Chinese car market grew in 15 years from 1m units a year to over 20m. In doing that it had very rapid economic growth and huge investment and was helped by a certain command and control economic system that is not present in India. India has a more participative and democratic system. Growth is still there and more is coming, but the speed is going to be a little bit different.”
