There are a number of things Nissan got wrong when it entered the Indian market, according to executive vice president Andy Palmer, but it has learned lessons.
He told India’s Business Standard the brand’s original strategy five years ago was to build a big factory in Chennai for achieving economies of scale, get the supply chain in order, fill the factory with cars for exports and grow the market in India.
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“Broadly that’s not changed. We continue to have a strong demand for exports. I suppose that is a nice problem to have. The demand for Micra after minor changes, for instance, has grown in Europe.
“Among the things that did change: we wanted to disrupt the distribution model in India. We were wise enough to understand that India is hard to understand. We wanted a series of partnerships in India, not knowing that Indians understand India better than we do.”
Some of them worked, some didn’t. Palmer added: “We had a flirtation with Bajaj which didn’t work out: we had two different images of what one product should be. We had an issue with HAI, our distributor, which is unfortunate, as your distribution model is key to sales. We have changed our model and are now doing it ourselves.”
Since taking on distribution Nissan has grown sales by 142% in a declining market. Palmer said the move had also allowed the carmaker to bring Indians into the company and run it with the Nissan way of working.
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By GlobalDataHe admitted that during all this “we lost about a year. Nissan India has a 2.2% market share now. We have launched new versions for the Sunny and the Evalia. Hopefully we’re back on trajectory and seek a 10% market share in a few years.”
The Nissan model range is also still being adjusted. Palmer said: “Evalia is probably the most obvious example where we took frugality to mean cheap, and it doesn’t. You can’t sell a van in a passenger car market. It was a product designed for Europe – a van and combi (where a van is treated as a van on weekdays and a car on weekends) market.
“The front of the car is well-executed, but the back of the car is relatively bare, for stocking goods etc. That wouldn’t work in India, where people usually have chauffeurs driving the car with adults sitting in the rear – possibly the owner of the car. Suddenly, the approach is nonsense, because you have cheap execution where the owner is sitting.
“So we had to turn the business model on its head and realise the rear is really important. We had to fully trim the inside of the Evalia, put the air-conditioning in, introduce captain seats, and change the definition of what frugal means. We needed Sunny to be more prestigious in its execution, with a heightened awareness of safety in India.”
