Nissan Reintroducing Datsun to Emerging Markets
Much to the chagrin of competitors like Toyota (NYSE: TM) and Tata Motors (NYSE: TTM), Nissan (OTC: NSANY) has announced plans to reintroduce its retired Datsun brand to emerging markets with a price range of $3,000-$5,000.
Without releasing exact figures, the investment in new-model development will be costly -- most likely in the $1 billion range. Nissan is attempting to tap into the emerging market category with a base price significantly lower than the $8,000 Tsuru model the company sells in Mexico.
Executive Vice President of Developing Markets for Toyota Yukitoshi Funo was quoted saying, "It's a big mistake to think you can introduce a cheap car in emerging markets and be successful," yet Nissan has decided to push forward, calling attention to its Datsun release with an ultra-low price tag.
Market share has been decreasing for Nissan in foreign markets and is expected to continue doing so. However, emerging markets continue to be an excellent source of revenue and product development for companies outside of the automotive industry, and Nissan wants to gain from that.
With an expected arrival date in 2014 and six new Datsun vehicles planned, the new model will be extremely basic (think manual transmission and few, if any, airbags) and the consensus even among Nissan employees is that the release will be difficult to pull off. Competitors also do not feel that there is enough demand to warrant the new model, let alone a new brand.
Datsun was discontinued in 1986, despite being the second largest selling foreign brand in the United States just a few years prior. The Nissan name was then introduced to take over the Datsun market and unify the company as a whole. According to The Wall Street Journal, the brand-name change caused much confusion and is, "still considered one of the worst marketing decisions in automotive history."
Nissan's Motor Chief Executive Carlos Ghosn believes reintroducing Datsun to the world will create excitement and help assist in his expectations of boosting Nissan's global market share from its current six percent to eight percent by 2016. Ghosn also expects emerging markets to take a larger share of auto sales and hopes that Datsun will reap the most benefits from increased demand.
There is immense criticism surrounding the new Datsun, from its predicted inability to tap into the emerging markets and its presence in the United States, (where the price tag is likely to become largely inflated). Whether the criticism is from bitter rivals that aren't offering as cheap of a car or from Nissan executives, the Datsun project has a team of members hard at work. Tata Motors' Nano, with a sale price of $1,900, was a disappointment in this sector, although the company blamed its lousy marketing campaign. Chrysler's Dodge (OTC: FIATY) division debuted a stripped down model called the Razor at the 2002 North American International Auto Show for $14,500, but the production model never saw the light of day.
Shares of Nissan are flat premarket after having closed down 0.48 percent on Monday.
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