I'm not trying to do a nostalgia play on people with Datsun: Nissan's Vincent Cobee - Livemint

Updated: Mon, Jul 15 2013. 12 02 AM IST New Delhi: On Monday, Japanese car maker Nissan Motor Co. Ltd will unveil a brand it had stopped selling 30 years ago. Datsun, Nissan's low-cost car, will be sold in markets such as India, Indonesia, South Africa and Russia. In an interview, the global head of the Datsun brand and corporate vice-president Vincent Cobee spoke about recreating the brand, the company's India plans and its volume targets. Edited excerpts: What was the idea behind rejuvenating Datsun brand? I will work you through the entire logic. First, there is an external demand logic. If you look at the car industry—2000, 2010, 2020. In 2000, in the mature markets or the countries of yesterday, which accounted for 80% of the global demand, (demand) was roughly 50 million cars. In 2020, the market will be 100 million cars. So the global market doubles, but if mature markets don't grow, we will lose from 80% in western Europe, North America and East Asia to less than 40%. Where is the 60% remaining? The 60% is made of high-growth markets, but beyond that is the emergence of the middle class. So that's the fundamental shift in geography, in need, in customer mindset, and in brand experience, expectations. Now the internal factor is that Nissan Motor Co. decided in the early '80s to stop the Datsun brand and the logic at that time was the branding rationalization. But we still have the brand Datsun, which belongs to us and which stood for 50 years for great engineering, modern design, light weight, good cost of ownership and which, in reality, accompanied the emergence of the middle class in Japan, then in America and in a number of countries. To some extent, we came to a conclusion that at Nissan, we had to have an offering for emerging and high-growth markets in the world and that will be potentially different from what Nissan brand offers in terms of product, in terms of service and brand value. We had a brand which actually stood for that, which was Datsun. So in 2008-09, (Nissan chairman and chief executive Carlos) Ghosn came to a conclusion that we need to do something and need to do it differently and we need to do it with Datsun. But Datsun's credentials were there 30 years ago. The new generation does not know about it. Again, I am not trying to do a nostalgia play on people who were buying Datsun in the '70s. What I think is important is that there is a demand out there for which a very specific offer needs to be made. That's a fact. Second thing, from a brand value point of view, it is adequate for us. So the Datsun brand is more in the form of an internal guide and a way for us to carry out our overall marketing exercise. I know there will be some customers who will come back from their old Datsuns to buy the new Datsuns, but that's not the case. The reality is that in some countries you still have huge awareness, such as South Africa and Indonesia, if not in the case of India or Russia. But the key for me is the DNA of the Datsun brand, which we tried to reshape for the modern demand. You must be aware that the mini car segment has not been doing well in the past couple of years. Sales of Maruti Suzuki's Alto have fallen from a high of 38,000 units a month to around 16,000 units. The interesting thing in this car industry is that this is a long-term industry. From the time you decide to buy a car and the time when you decide to sell that car, usually it's five-six years, but for me it's four years. So at a certain point you need to be convinced about the macroeconomic conditions. You need to believe that this is right and this is not right. Now you look at India, what is the underlying macroeconomics and what are the short-term volatility creators. The underlying macroeconomics is power of tomorrow, a billion people, net economic growth, car ownership of 15 persons per 1,000 inhabitants. Another part of the macroeconomics is the huge challenge of infrastructure, a trade imbalance of buying oil because you don't produce oil. So the picture is not full rosy, but the picture says that there will be a growing car market in the country. Now the short-term volatilities are interest rates, fuel prices, the underlying global economic recession. So this is what has affected the Indian market over the last three-six months. This is a much more volatile environment than the mature market. If you look at Japan, where I live, or Western Europe, where I was born, you can very, very easily predict slow recession and the volatility around the slow recession is not so high. We are living a slow recession. But when you look at India, Indonesia, South Africa or Russia, you can predict that things will move. So when we make that decision, I think we also need to be aware of the fact that macroeconomics say that it will grow. The short-term microeconomics says it will be volatile. How many units of this brand do you intend to sell in a year? I can't tell you about the first year but what I can tell you is that we aim at representing up to half of Nissan Motor's sales in India by 2016. And then when you know that Nissan Motor intends to sell 400,000 units per year, then you have an idea of our ambition and the ambition is somewhere around 200,000 cars per year for the Datsun brand. 2016 is another three years from now and you don't have a marketing network. You have to depend upon your parent, which is dependent on its tie-up with Hoover, and there are a lot of stories in the market about Hoover and Nissan. Will that be a problem? I don't think it will. Today we have 100 Nissan dealerships and that will grow by the time we launch our first product. One thing we know is we will provide a very budget environment for Datsun, relying on the same investors (dealers) as Nissan. We will articulate our market strategy based on those two pillars and they will include the maximization for return on investment for our investors, which is very important. It will also include the huge growth of infrastructure between 2014-16 because you can't sell 400,000 cars with the number of outlets we have today. There will be a very substantial dealer development by then and Datsun will be an articulated part of it. This is structured and planned and the details are being worked out. Would you require fresh manufacturing capacity as it will be a big volume car for you? Today we have a plant in Oragadam, next to Chennai. That plant has a capacity of close to 400,000 cars. As of now, a large part of its capacity is dedicated to exports. So as we (Renault Nissan alliance) move forward, the shift of the domestic capacity utilization will grow. If your question is do I run into the risk of running out of capacity by 2016—then, yes, I will. But that's a good problem. We have a certain amount of flexibility there and increase the capacity by 10-20%. We have remaining space in the land, we can expand there. If the need arises, we may consider an additional plant. You seem to be very bullish. What makes you so confident about taking on the companies in that segment? Maruti Suzuki has been a leader for years despite various competitors. This is indeed a market, which has a very high level of competitiveness today. There are very strongly established players. When this market moves from two million cars a year to four-five million in three-four years, you have an emerging middle class and they want choice. It will also give economic space for differentiators. I am not trying to come with a "me too" strategy and try to struggle to get leftovers from dominant players. I am trying to come with an objective of a product with a great brand environment, creative and innovative services and, hopefully, if I do that right I will be able to capture a substantial part of the middle class. Now, I am optimistic because it is hard work. I still believe that we could do better as an industry, which is a 400,000 units segment in India. Will Datsun cannibalize Nissan at any stage? Nissan is providing global values with global products—Micra, Sunny, Evalia or Teanna. The customers who are attracted by this brand are usually affluent and they have certain aspiration for global products. Datsun will provide a global one (in terms of product values) with local products with strong focus on India with single-target customers—for India, with India, of India. The product itself and the way we will market will be fundamentally different. via Technology - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNGnCg1M7J5tCq6SjSsIpO_I6DKH9w&url=http://www.livemint.com/Companies/zwi1AfnPwaYr4ap1PP1DcL/Im-not-trying-to-do-a-nostalgia-play-on-people-with-Datsun.html

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