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Nissan looks to profit on retro Datsun brand

25 march 2012, 16:38
0
various models of Nissan cars. ©AFP
various models of Nissan cars. ©AFP
Three decades after sidelining Datsun, Japan's Nissan is dusting off the brand to tap emerging markets, a move sure to stir up nostalgia among fans of the low-cost, fuel-efficient cars, AFP reports.

Analysts said the plan to sell Datsuns in Indonesia, Russia and India would help the auto giant take on fierce competition in those markets without hurting its existing brands or spending time and money on creating a new one.

"Reviving the Datsun brand is better than creating a new brand as the old Datsun cars are still there and recognisable by some people," said Kota Yuzawa, an auto analyst at Goldman Sachs in Tokyo.

Datsun -- the first set of wheels for many adolescents -- was a big seller especially in the United States where its sporty, two-door hatchbacks became synonymous with fuel-efficiency during the 1970s oil crisis.

But Nissan phased it out from 1981 as the company pushed its own name onto its fleet of cars.

Last week, chief executive Carlos Ghosn said Datsun would be a "global brand" alongside Nissan-branded cars and its luxury line Infiniti, although there are no immediate plans to sell it in Japan or other mature markets.

"Datsun is part of our history. It was synonymous with affordable and reliable cars," Ghosn said in Jakarta on Tuesday.

"With the return of Datsun, we want to add modernity to it, with a new level of quality, like a high fuel economy."

Company spokesman Mitsuru Yonekawa said owners of the old Datsun brand were "optimistic about their future, had upward mobility, a strong yearning for possessing cars and yet were somewhat demanding about the quality of cars".

The updated models will attract "quite similar" customers, he added.

Carmakers have released models targeting specific markets before, but Nissan's revival of a shelved brand for emerging economies is unprecedented among Japanese automakers, analysts said.

Nissan would not reveal prices or details of the models it will sell from 2014, but the new Datsun may cost as little as 500,000 yen ($6,000), with most parts sourced locally, the Nikkei business daily reported.

Nissan, which posted global sales of almost 6.7 trillion yen in the nine months to December, said it was aiming to make Datsun eventually account for about half of its total sales in each market, the company spokesman said.

Russia was among Nissan's top foreign markets last year, though still far below China and the United States. Asia -- excluding Japan -- accounted for nearly one-quarter of sales, including Indonesia and India.

Nissan's move underscores the growing importance of emerging economies, a key battlefield among global carmakers amid stagnating growth in developed markets.

"It reflects the importance of emerging markets not only for Japanese automakers but for all kinds of industries," said Yusuke Ichikara, economist at Mizuho Research Institute.

The push is also part of a wider trend among Japanese companies which have taken advantage of the yen's strength in recent years to diversify their business and expand global operations.

"What's important in doing business successfully in emerging markets is to localise products," Ichikara said.

"Creating a different brand for affordable cars is a wise move to avoid hurting the image of existing brands," he added.

Toshiyuki Kanayama, senior market analyst at Monex Securities, said Japanese automakers cannot ignore India, Indonesia and Russia, where the size of the middle class is expected to balloon.

"But there is no way they can beat India's Tata Motors in terms of prices," Kanayama said, referring to the ultra-cheap Nano model, which can be had for less than $3,000.

Nissan has said it will invest $400 million in a plant in Indonesia -- which saw vehicle sales jump around 16 percent last year -- to more than double production capacity from 100,000 to 250,000 vehicles a year by 2014.

The move will mean Nissan, which formed an alliance with French carmaker Renault in 1999, will be able to make more cars in Southeast Asia's biggest economy than its main rival Toyota.

But the company is sure to face big challenges from competitors who already have a foothold in some of the markets, said Goldman's Yuzawa.

"Maruti Suzuki is prevailing in India, (Toyota's) Daihatsu is strong in Indonesia," he said.

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