Teana and X-trail deserve to sell in large numbers

Japan’s third largest carmaker Nissan, is in the process of re-devising its import strategy. Though their luxury car Teana and SUV X-trail are widely praised by the media, their high cost has resulted in below-par sales. Price is the main factor working against Nissan right now. With the launch of their small car in India just 5 months away, Nissan would prefer a wider reach for their luxury cars to speak about the brand.

Nissan recently launched upgraded versions of the Teana and X-trail in India which pack a punch. However, as we mentioned, their expensive price meant that they never received the success that they deserved. So Nissan is currently assessing the possibility of importing (CKD) Completely knocked down kits of these two vehicles and assemble them at the upcoming plant at Oragadam. This would prove to be a really good move as the prices would reduce by a huge amount and take both these vehicles directly into the core of their segments.

What might worry Nissan though are the number of units that could be sold if they went through the CKD route. At wOs, we can assure Nissan that if the two cars are imported as CKD’s, then their vehicles have enough stuff to speak for themselves and give Honda and Toyota a good run for their money. The move, if implemented, could yield significant cost reduction on its luxury cars, said Nissan India’s CEO and MD Kiminobu Tokuyama, who will complete one-year at the helm of India operations next month. “We have not decided yet but are studying alternatives,” he said. Pointing to the heavy import duty, he said “the price point of Teana and X-trail is high because of its positioning in the premium segment and the high import tax.”

Another potential way to trap the market is by setting-up a finance arm to handle their cars.”We are looking at wholesale and retail financing to improve sales,” he said. The company, has not yet finalised the model for this and is yet to approach the RBI for a non-banking financing license. A finance arm would also help Nissan when it launches its small car in mid-2010. What was interesting though was Mr.Tokuyama not revealing any details of the name of its small car for India.

Another major concern for Nissan is the state of its dealerships in India. Currently, there are just 9 in India and they plan to take it up to 55 by 2012 but we feel that its too slow and its a big gamble not to have dealers when their small car goes on sale.

Catch our scoop on Nissan Micra here.

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Ashok Leyland JV

An 8 seater people carrier version and...

When asked about the state of Nissan’s JV with Ashok Leyland, he told that the company was happy with the progress. “By mid-2011, we will start production at our existing facilities (Ashok Leyland’s Hosur unit),” he said.  In the initial phase, both the companies will roll-out the model from their respective plants. Subsequently, depending on the market response, the JV partners will look at joint production of LCVs from its new plant, Mr Tokuyama said. “It will not completely be the same. There will be differentiation in both products,” he said.

...and cargo versions will be made and sold in India

Nissan will take a stand on exporting the SUV if they found a market. He even pointed out Japanese and European manufacturers will be their main competitors in the future.

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