Is Nissan on a cliff-edge 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: SIAMGuillaume 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 55 dealerships (3S) parted its ways with Nissan since 2015. 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 S.no City Year of Closure Resign Terminate / closed Current Status 1 Kannur 2018 Terminated NA 2 Mumbai (Andheri) 2015 Y Out of Auto, left India 3 Mumbai 2017 Y closed within one year of operation heavy losses 4 Mumbai 2017 Y closed within one year of operation losses 5 Mumbai (Worli) 2016 Y dealership now a bank 6 Pune 2016 Y taken ford 7 Pune 2014 Y taken over as shiv nissan which was terminated 8 Pune 2018 Terminated arbitration 9 Pimpri-Chinchwad 2016 Y NA 10 Aurangabad 2018 Y Closed due to losses out of auto 11 Ahemdabad 2015 Y take over by other person for nissan 12 Nashik 2018 Y closed by dealer losses in nissan 13 Ahmednagar 2017 Y given for honda 14 Nagpur 2014 Y taken landrover 15 Nagpur 2018 Terminated arbitration, out of auto 16 Bhopal 2013 Y taken mahindra 17 Bhopal 2016 Y out of auto 18 Indore 2013 Y out of auto 19 Surat 2016 Y NA 20 Himmatnagar 2015 Y NA 21 Raipur 2018 Terminated arbitration 22 Bilaspur 2018 y Terminated arbitration 23 Sangli 2018 Y closed by dealer one of two dealerships resigned due to lossees 24 Vijawada 2018 Terminated arbitration 25 Chennai 2011 Y NA 26 Chennai Velachery 2013 Y incapable to run because of losses 27 Chennai Ambattur 2013 Y incapable to run because of losses 28 Chennai Velachery 2016 closed down during Chennai Floods ( in arbitration) 29 Chennai Ambattur 2016 closed down during Chennai Floods ( in arbitration) 30 Chennai Nandanam 2016 closed down during Chennai Floods ( in arbitration) 31 Erode 2017 y NA 32 Trichy 2016 y NA 33 OMR 2016 closed by dealer Closed due losses 34 Egmore 2017 closed by dealer Closed due losses 35 Varanasi 2018 terminated Civil litigation , out of auto 36 Agra 2018 terminated Civil litigation , out of auto 37 Gurgaon 2016 Y out of auto 38 Delhi 2015 closed by dealer Dealer Principal closed and left India 39 Delhi (Okla) 2017 y dealership takeover by other person for Nissan 40 Delhi (Moti nagar) 2016 y closed due to losses in business 41 Delhi 2017 Y now a renault dealership 42 Delhi 2017 closed by dealer out of auto, under arbitration. 43 Delhi 2017 Y NA 44 Delhi 2014 Y NA 45 Ghaziabad 2017 Y NA 46 Sonepat 2017 Y Had three dealerships of nissan, closed down 2 47 Panipat 2017 Y Had three dealerships of nissan, closed down 2 48 Panchkula 2016 Y NA 49 Chandigarh 2015 Y NA 50 Jammu 2015 Y NA 51 Muradabad 2014 NA 52 Udaipur 2018 Y Took Jeep and Fiat Dealership 53 Guntur 2018 Terminated Took hyundai at Original 3S location 54 Chandigarh 2015 Y Took mercedes 55 Mandi 2016 Y NA 56 Dehradun 2016 Y NA 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.

from The Economic Times https://ift.tt/2KtYh64