Nissan launches 2 new cars in India

Nissan Motor Co. launched two new car models in Mumbai Wednesday, part of an aggressive India expansion plan by Japan's third-largest automaker.

"India is the single biggest country in Nissan's investment plan in 2009," said Kiminobu Tokuyama, chief executive and managing director of Nissan Motor India Pvt. Ltd.

He declined to specify exactly how much of Nissan's fiscal year 2009 capital expenditure budget of 350 billion Japanese yen ($3.6 billion) will be directed to India as the company works to diversify its product line, raise its market share and transform India into a global production hub.

The new versions of Nissan's X-Trail sport utility vehicle and luxury Teana sedan unveiled Wednesday during a smoke and light show with live African drumming will not immediately solve the problems -- chiefly high prices, big cars that lack mass appeal and desperately low sales volumes -- that analysts say have thwarted Nissan's India efforts.
But Tokuyama said that is about to change.

Like other global auto majors, Nissan has been pushing into emerging markets like India and China to cut production costs and sustain sales growth as demand in mature markets stagnates.

Currently, Nissan ships cars to India ready-made from Japan, incurring a 109 percent import duty. That high cost -- the retail price of the new X-Trail starts at 2 million rupees ($42,670) and the new Teana at 2.1 million rupees ($43,121) -- has thwarted sales, executives said.

Since Nissan began selling cars in India in 2004, it has only sold about 1,000 X-Trail vehicles, and just 300 Teana sedans, executives said.

Tokuyama said that by 2012, Nissan plans to expand its India product line from two to nine models, five of which would be manufactured in India, and ramp up its dealer network from five to 55 outlets.

Tokuyama said Nissan's first India-made car -- a new version of the hatchback that now sells under the Micra brand in Europe and the March brand in Japan -- would roll out of its Chennai factory, in southern India, in May 2010.

That factory is the centerpiece of a seven-year, 45 billion rupee ($920 million) investment plan undertaken with France's Renault, which owns 44 percent of Nissan.

Nissan also plans to use the Chennai factory as a global export hub and shift production of Micra cars for Europe from the U.K. to Chennai. Tokuyama said Nissan would start exporting 110,000 cars a year from Chennai to Europe, the Middle East and Africa starting in the second half of 2010.

"Production cost is an important factor in the production of the Micra," he said. "Other global manufacturers have found that India is very good quality and cost competitive."

Tokuyama said the U.K. factory would be used to produce another vehicle and said he did not anticipate any layoffs. He said Nissan also plans to shift production of the March hatchback from Japan to a factory in Thailand.
Nissan, along with Renault and India's Bajaj Auto, is also developing an ultra-low cost car to compete with the Tata Motors Nano. Tokuyama declined to say when the model might be ready.
Mohit Arora, who covers the Indian auto market for J.D. Power from Singapore, said Nissan was late to come to India and its current offerings are too expensive for most Indians.

"Unlike, let's say, Toyota and Honda, which have been there for some time, Nissan was a late arrival on the Indian scene," he said. "They were focused on markets which had given them faster growth, like China."
But, he added, "That's not to say they've missed the boat."

source:businessweek