Is Nissan on a cliff-edge in India?


    The newly appointed chief of Nissan India operations, Thomas Kuehl, has embraced and revitalized the aspirations of his predecessors to achieve 5 percent market share.

    The company is working to introduce electric vehicle - Nissan LEAF in India. At the same it is also testing e-Power technology in India.
    The Japanese carmaker Nissan India’s wild goose chase for five percent market share has been re-pronounced. Aiming this, the carmaker made various attempts in revising strategy and re-doing its business plan in the last few years, but no dice till now.

    The newly appointed chief of Nissan India operations, Thomas Kuehl, has embraced and revitalized the aspirations of his predecessors to achieve 5 percent market share. Now Nissan India has yet again shifted its goal post for the crucial five per cent market share in the local market to 2021.

    “Nissan is growing steadily towards achieving 5 per cent market share by 2020-21,” the company told ETAuto in an email response few weeks ago.
    Thomas Kuehl, who is having second inning in the Indian auto industry, may not find it as easy. However, his prior stint as brand head of Skoda Auto India, another low-volume company, will be an advantage. At Skoda, his tenure was neither stellar nor muted.

    Thomas took the reign from Guillaume Sicard, who in a 2015 interview to ETAuto announced plans to shift focus more sharply on domestic sales in India as part of a strategic change to achieve parity in local sales and exports from the country within five years. Guillaume also hankered after the 5 percent market share.

    “The vision is to aim for at least 5% market share in India. The priority will always be domestic market,” Guillaume Sicard, told ETAuto in an interview in 2015.

    Then Nissan’s production in India was heavily skewed in favour of exports. In FY15, Nissan exported 65 percent of the vehicles it produced in India while only 35 percent were sold in the domestic market.

    OEMs Market Share FY18
    OEMs FY2017 FY2018 Market Share FY17 Market Share FY18
    FCA 5,665 21218 0.19 0.65
    Force 2,731 3081 0.09 0.09
    Ford 91,405 90061 3.00 2.74
    GM 25,823 2500 0.85 0.08
    Hindustan 662 456 0.02 0.01
    Honda 1,57,313 170026 5.16 5.17
    Hyundai 5,09,705 536241 16.73 16.31
    Isuzu 1,607 2831 0.05 0.09
    M&M 2,36,130 248859 7.75 7.57
    Maruti Suzuki 14,43,641 1643467 47.38 49.99
    Nissan 57,300 52796 1.88 1.61
    Renault 1,35,123 102222 4.44 3.11
    Skoda 13,712 17387 0.45 0.53
    Tata Motors 1,72,504 210200 5.66 6.39
    Toyota 1,43,364 140645 4.71 4.28
    Volkswagen 50,042 45329 1.64 1.38
    Total 3046727 3287319

    Source: SIAM

    Guillaume Sicard, then (in 2015), wanted to achieve equal contribution from domestic and exports to its total sales volumes in the next five years. In 2015, the company’s market share in domestic sales was at 1.8 percent which has rather dipped to 1.6 per cent in FY18. Nissan sold 57,300 units in FY17 which came down to 52796 units in FY18, thus a year on year drop of 7.8 percent.

    Three years have gone by but the status doesn't look anywhere closer to the Guillaume’s aspirations. Industry experts don’t seem so convinced if the company can achieve the 5 percent market share any time soon.

    “The key challenge for Nissan over the next 2-3 years is to be relevant in the Indian market. Nissan has struggled to bring facelifts and new models thereby adversely impacting brand recall and relevance. The existing line-up is showing its age and the models are not exciting enough anymore which strangely goes against Nissan's global market positioning, “says Kaushik Madhavan, Director, Mobility, MENASA, Frost & Sullivan.

    The carmaker also lost the status of second largest exporter of passenger vehicles from India in 2014-15. Going down further, in FY18 Nissan sank to 6th rank in terms of exports of passenger vehicles from India. Nissan India exported 67829 units in FY18 compared to 109459 units it shipped from India in FY17 positioned at 4th rung.

    The dwindling sales seems to have a pronounced impact on its network and dealer partners as over 50 dealerships (3S) parted its ways with Nissan since 2013. However, about nine of them were terminated by Nissan for some reasons best know to the company.

    “I was one of the first 32 Nissan dealers in country. My dealership in Raipur Chhattisgarh AKS Nissan has suffered a loss of over 7.5 crore in the last eight year. I had total 3 outlets which includes one 3S,” Akshay Jain, owner, AKS Nissan told ETAuto. Now he has a Honda Two-wheelers dealership. AKS Nissan was recently terminated and is under arbitration.

    In key markets like Mumbai four dealerships have resigned as most of them suffered huge losses. Many of the dealers are now out of the auto business. The dealers estimate their combined losses running into over Rs 150 crore since 2010 with an average loss of Rs 4-5 crore.

    Nissan Dealership Closures in India
    Sr City Name Year of Closure
    1 Mumbai (Worli) Ichibaan Nissan 2013
    2 Mumbai (Andheri) Torrent Nissan 2015
    3 Mumbai Shakti Nissan 2017
    4 Mumbai Royce Nissan 2017
    5 Mumbai (Worli) Kamla Nissan 2016
    6 Pune Shivalik Nissan 2016
    7 Pune Oxford Nissan 2014
    8 Pune Shiv Nissan 2018
    9 Pimpri-Chinchwad Bhujbal Nissan 2016
    10 Aurangabad Shirin Nissan 2018
    11 Ahemdabad Petal Nissan 2015
    12 DehradunOberai Nissan2016
    13 Ahmednagar JAI MALHAR Nissan 2017
    14 Nagpur Navnit Nissan 2014
    15 Nagpur Gandhi Nissan 2018
    16 Bhopal CI Nissan 2013
    17 Bhopal Ranjeet Nissan 2016
    18 Indore Asian Nissan 2013
    19 Surat Silicon 2016
    20 Himmatnagar Riya Nissan 2015
    21 Raipur AKS Nissan 2018
    22 Bilaspur Vishal Nissan 2018
    23 Sangli SMG Nissan 2018
    24 Vijawada Lucky Nissan 2018
    25 Chennai PSN Nissan 2011
    26 Chennai Velachery Sheriff Nissan 2013
    27 Chennai Ambattur Sheriff Nissan 2013
    28 Chennai Velachery Avenue 2016
    29 Chennai Ambattur Avenue 2016
    30 Chennai Nandanam Avenue 2016
    31 Erode Rajeswari Nissan 2017
    32 Trichy SJB Nissan 2016
    33 OMR Jubilant Nissan 2016
    34 Egmore Jubilant Nissan 2017
    35 Varanasi Avantika Nissan 2018
    36 Agra Atmaram 2018
    37 Gurgaon Shideshwar Nissan 2016
    38 Delhi SKY Nissan 2015
    39 Delhi (Okla) Kaizen Nissan 2017
    40 Delhi (Moti nagar) Kaizen Nissan 2016
    41 Delhi Treo Nissan 2017
    42 Delhi Libra Nissan 2017
    43 Delhi Sterling Nissan 2017
    44 Delhi Nath Nissan 2014
    45 Ghaziabad GS Nissan 2017
    46 Sonepat Malwa Nissan 2017
    47 Panipat Malwa Nissan 2017
    48 Panchkula Berkley Nissan 2016
    49 Chandigarh Hind Nissan 2015
    50 Jammu Lahori Nissan 2015
    51 Muradabad BTC Nissan 2014
    52 Udaipur Nidhi Kamal Nissan 2018
    53 Guntur Lucky Nissan 2018
    54 Chandigarh Bhagat Nissan 2015
    55 Mandi SPG Nissan 2016
    (Corrigendum: Kannur dealership is still operational. Their name was put in the list by mistake which has been removed. We regret and offer apology for the same.)

    Looking from strictly only vehicle sales revenue point of view, the average annual vehicles sales turnover of Nissan dealership is one of the lowest at Rs 9.9 crore a year. The number is highest in case of Toyota which stands at Rs 86.9 crore followed by country’s largest carmaker Maruti Suzuki. Average annual vehicle sales turnover for a Maruti Suzuki dealership stands at 80.1 crore.

    According to our research Nissan has about 170 3S facilities across India which translates into one of the lowest annual sales of Rs 9.9 crore for every dealership.

    Average revenue per dealership

    Brand Total Sales(Apr17-Mar18) Sales Turnover(In crores) without GST* Average Ticket Size(Lacs without GST) No of Dealers (3S) Average Turnover per Dealer per annum(in Crores)
    Nissan 12401 594.1 4.79 170 9.91
    Datsun 40391 1090.66 2.7
    Honda 170026 13519.52 7.95 339 39.88
    JEEP 19955(July17-Mar18) 3097.84 15.52 62 49.96
    Toyota 140645 22946.38 16.31 264 86.92
    Volkswagen 45329 3331.96 7.35 107 31.14
    Skoda 17387 2583.96 14.86 73 35.4
    Maruti 1643468 86309.58 5.25 1077 80.14
    Note: The number may slightly differ from actual. Sales turnover is strictly based on the revenue generated from vehicle sales.

    The company reports 272 sales and service outlets across 220 cities. “We are steadily increasing our reach, especially, in Tier 2 and 3 markets, for customers who have not experienced the Nissan and/or Datsun brands before,” company informed in an email.

    As Nissan pinned strong hope for volume with the launch of Datsun but it did not work out rather it’s burdened the dealers with shrinking turnover and margins.

    Some new dealers also joined Nissan in the recent past. One such was Landmark Group which got exclusive rights to have dealerships across Pune.

    Speaking about his association with Nissan Sanjay Thakkar, promoter and chairman of Landmark Group said: “Nissan is one of the global leaders in EV space and as EVs are going to be the norm in India; hence we see our association with Nissan as a strong support for future.”

    One of the industry experts on condition of anonymity said the main reason behind slow progress has been insatiability. “Go Cross launch got delayed while Kick launch has also been delayed and will now be launched in Q4 of FY18-19, most likely in January or February 2019,” a dealer informed ETAuto.

    Recently ETAuto reached out to Nissan India on how strongly it believes in its growth story after the hiccups. The company responding to email said: “In line with our growth strategy in India, we aim to introduce up to 8 new cars from the Nissan and Datsun brands by 2021... At the same time, we also brought the legendary Nissan GT-R for the first time in India.”

    The company is working to introduce electric vehicle - Nissan LEAF in India. At the same it is also testing e-Power technology in India.

    In a recently held dealer meet, the carmaker has announced a 60 percent hike in its marketing plan to Rs 250 crore. “I am hopeful as the new management seems very aggressive. We expect they might get some volume this year,” a newly appointed dealer told ETAuto.

    The carmaker is also planning to expand its existing product portfolio and tap into additional segments, and strengthens the network, including rural areas in the market.

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