Good bye Datsun! The error of judgement that failed the Nissan brand

Japanese carmaker Nissan has pulled the plug on its Datsun brand of vehicles, in line with its global realignment of its portfolio. The company confirmed the development to Fortune India. “Production of Datsun redi-GO has ceased at the Chennai Plant (Renault Nissan Automotive India Private Ltd). Sales of the model will still continue,” the company says, adding that Nissan currently is, “focusing on core models and segments that bring the most benefit to customers, dealer partners and the business.”

However, the company has also assured that existing owners of Datsun vehicles will not be left to fend for themselves. “We can reassure all existing and future Datsun owners that customer satisfaction remains our priority, and we will continue to provide the highest levels of after-sales service, parts availability, and warranty support from our national dealership network,” the company adds.

Nissan had earlier discontinued the production of its entry-level GO hatchback and a MPV, GO+. According to the strategy, Nissan had pulled out the Datsun business from Russia and streamlined operations in some ASEAN markets.

"As part of Nissan's global transformation strategy, Nissan is focusing on core models and segments that bring the most benefit to customers, dealer partners and the business. In India, this includes the all-new, locally produced Nissan Magnite with over 100,000 customer orders to date,” the company said.

Notbaly, the company had earlier discontinued the Datsun brand once already — before it forayed on Indian shores — and ambitiously revived it as an affordable vehicle brand in 2013 — with an international relaunch in India under the leadership of Carlos Ghosn, the controversial head honcho of Nissan who was detained on charges of embezzling the company’s money for his jet-setter lifestyle.

A fatal, miscalculated move

Despite an ambitious launch, the company failed to create an impact because it could not deliver a value proposition for its customers. According to Sergius Barretto, automotive consultant and managing editor of Autocar India, the ill-fated brand remained fixated on the price of their portfolio. “The crux of Datsun's failure was its strategy of treating 'entry level' as a hard price point instead of creating segment wise entry level products. Thus, no Datsun would cost more than a certain price; in India about Rs 10 lakh. Instead, the company should have been building entry level small cars, entry sports cars, entry level luxury cars, for example,” he tells Fortune India.

The reincarnated Datsun launched Go — an entry-level, affordable hatchback with low running and maintenance costs, positioned to lure first-time car buyers. It also launched the GO+, an affordable MPV, which although was positioned at a compelling price-point, its third-row had limited utility because the car was a sub-4-metre MPV, in order to attract lower tax rates.

However, Barretto explains that in order to sell its vehicle at a particular cost, Datsun adopted a policy of brutal cost-cutting, and offered scant features, which felt antique when juxtaposed with competition. Datsun did not have any value in its cars; its cars were only cheap — something which does not bode well in a market like India, especially the ones who opted for lower-spec variants.

The concept of a bare-bones, no-frills car never really found the mainstream acceptance it aspired to be — the Tata Nano project being a case-in-point. Thus, even makers of luxury cars like Mercedes-Benz are fixated on creating value propositions in its portfolio — something which Martin Schwenk, the managing director and CEO of Mercedes-Benz India Private Limited emphasised in an earlier conversation with Fortune India.

However, what bludgeoned the company’s image was its dismal, unacceptable NCAP ratings. Datsun Go received a zero rating for adult safety and a two-star rating for child safety. The Global NCAP noted at the time that even adding airbags to the car would not alleviate the situation as the structure of the car makes it redundant.

In fact, Max Moseley, chairman of NCAP at the time, had even written to Ghosn, expressing concerns over its safety. “It is extremely disappointing that Nissan has authorised the launch of a brand new model that is so clearly sub-standard. As presently engineered, the Datsun Go will certainly fail to pass the United Nation’s frontal impact regulation. In these circumstances, I would urge Nissan to withdraw the Datsun Go from sale in India pending an urgent redesign of the car’s body-shell,” he said.

“Think of Samsung, their phones are by no means cheap, but compared to Apple they are entry level. That, in essence, is where Datsun failed,” avers Barretto, and the numbers are emblematic of Datsun’s fatal path that it trudged on. Between January and December 2021, Datsun sold a mere 4,296 units in India, which corresponded to a market share of 0.09%. The Nissan brand in totality sold 33,684 vehicles in FY '22, garnering a market share of 1.24%.

In the crosshairs of organisational troubles

Nissan’s internecine dispute with Hover Automotive India over the former’s unilateral termination of its exclusive sales, marketing and distribution agreement had cast a shadow on the re-launch of the Datsun brand. Nissan had signed an agreement to establish an outsourced model for selling its private vehicles, which ostensibly elicited a lot of apprehensions from the industry.

Hover had said at the time, "Nissan does not have any legal basis for the termination of services of its national sales company — Hover Automotive India Pvt Ltd — in India.’’ It further added, "HAI understands that Nissan wants to move quickly but it is possible only with the cooperation and consent of HAI."

After terminating the agreement, Nissan had taken up the mantle of selling, distributing and marketing all Nissan-badged cars in India, which had thrown a wrench into the dealership network — an unenviable situation for a new brand in the entry-level segment.

Since Datsun was a project led by Ghosn, when the scandal broke out and he was indicted for gross misuse of company’s assets, and later misappropriation of funds, his dismissal also took a toll on Datsun, as the company started to look away from and strike down all Ghosn-led investments — as it found them unremunerative, and also as an impediment to introducing new vehicles.

In a major restructuring move in the post-Ghosn era, the company stopped producing Datsun compact cars in Indonesia and Russia in 2020, and India was one of the last vestiges of a brand with the legacy that encompassed nearly a century. It has become the third international brand on which the axe has fallen, after Occidental behemoths Chevrolet and Ford exited India.