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 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|
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|
|5||Mumbai (Worli)||Kamla Nissan||2016|
|13||Ahmednagar||JAI MALHAR Nissan||2017|
|26||Chennai Velachery||Sheriff Nissan||2013|
|27||Chennai Ambattur||Sheriff Nissan||2013|
|39||Delhi (Okla)||Kaizen Nissan||2017|
|40||Delhi (Moti nagar)||Kaizen Nissan||2016|
|52||Udaipur||Nidhi Kamal Nissan||2018|
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)|
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.