On how return of the Datsun brand and meeting stringent cost targets.
06 Feb 2014 | 3752 Views | By Sumantra B Barooah
How was the Datsun project developed, in terms of partnering with suppliers to meet stringent costs?
We have seen in India that a product made somewhere is then brought here and localised. So the difficulty is that we have design and development done and matched to local capability but ...
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How was the Datsun project developed, in terms of partnering with suppliers to meet stringent costs?
We have seen in India that a product made somewhere is then brought here and localised. So the difficulty is that we have design and development done and matched to local capability but it had its own benefits. But there were challenges from the basic design of the part and as we had copy localisation, we developed frugal engineering. We had ideas but could not be incorporated as they had the design already done. It looked like all would be imported and that was how we were. We were competitive but customers had no options. Things have changed, new aspirations are here and we have the education and the exposure.
So when we spoke about the return of Datsun, we went back to Japan where we had a similar scenario. Cars were being imported and aspiring buyers were coming into the market, they wanted a product that would meet their dreams. We are now at the situation where we have the experience and skills but need basic design and development. So with Datsun, we come with basic reliability. We are going through a tough time, high growth has to be achieved by the least expenditure, so we have to use what expertise we have. We have, therefore, developed the Go here in India.
Better fuel efficiency and better acceleration required lightweighting. We cannot reduce weight by knocking off features. When you give a task to an engineer who is used to developing a product for matured markets, he begins to de-content. When you de-content, you may reduce cost by one rupee, but you lose Rs 10 worth of emotional value of the customer.
This country’s engineering base is different. We start from base and the one rupee worth of feature we add is a value of Rs 10 for the customer. So to achieve roominess, we integrated the handbrake with the instrument panel. Along with roominess, it added to the ergonomics. Seventy percent of our customers are first-time buyers and most forget to release the handbrake before driving. In the Go’s case, the customer is bound to notice if the handbrake is engaged before driving off. Every part of the Go is with innovative technology. That’s why we are more or less 100kg lesser than the normal car.
What is the kind of product line-up that Datsun could have?
Our product line-up is very simple — a product each for yesterday’s family (husband and wife), today’s family (husband, wife and kids) and tomorrow’s family (husband, wife, kids and grandchildren). We started working from the middle (family), and now we are trying to go a step ahead.
How much of platform sharing can we expect between Nissan and Datsun cars? How does it work as part of the Nissan 88 programme?
We start with the customer and develop the product accordingly. We never started by saying that we want to make an A-segment or a B-segment car. Brands are never positioned on hierarchy. Products have a price positioning. Each brand has to live and breathe with the target customer. We have Infinity, Nissan and Datsun.
In some nations, we may deliver a car after receiving a phone call and the payment. But there is a brand called Datsun where the customer will come with his family and it will not be a purchase; it will be a celebration because he is going to spend his two years of disposable income which his father or grandfather may not have had. It is more than a pension plan for him. In terms of value, it is more for this customer than the other customer who sends the money and driver to pick up his car. So, the aspirations are different. The product offering has to be different. In Nissan, brand power is key. Its three brands are key pillars to drive our mission and Power 88.
What about the segment that you are creating but what is the size of the market?
We are going to address 50 percent of the TIV in India which is not addressed by Nissan Motor Company. To be a successful business, we need economies of scale. Datsun will have economies of scale which will be limited to that country only. To have a profitable and sustainable business, I have to minimise the cost of investment. Datsun’s business model is high business opportunity, low cost of investment. Saying is easy but doing is difficult! We can have low cost of investment by using local engineers of 7,000-8000, suppliers which are our existing assets. If we guide them, they have enough knowhow of how to make a car. And this is what they have done with the Datsun Go. So, low cost of investment and high business opportunity will drive Datsun’s business case. The result will be that nearly one-third or half of our (Nissan’s) volume will come from Datsun (in India, Indonesia and Russia), by 2016.
The Go will meet some formidable competitors. How will it compete against them?
Very simple. We developed our product in line with customer aspirations. Today’s options include something based on antiquated technology which was made somewhere else and brought in here, or a used car. Customers have access to information and they know what a product means. We are confident we have a value proposition. Benchmarking is a good exercise to convince yourself that you are right. But I think that does not give you customer insight. We know what the customer wants tomorrow. The marriage between customer discovery and technical discovery gives you the product value proposition. And as a result, you have a price positioning which is in line for a successful marriage forever.
What similarities do we see in the markets other than India where Datsun is going?
We see high growth opportunities, aspirational customers that want to be seen as successful in markets like Africa, the Middle East beyond SA, Russia and Indonesia. So we have to look at market size, the country’s economic drivers. For example, take Ghana in Africa that reminds me of China. It has IT and cocoa, which means an aspirational buyer. But the market is small, but difficult to industrialise so we may use a hub-and-spoke model for that market.
What about a small SUV to meet the aspirations of a set of ‘risers’ who may not want a hatchback?
What is important is what customers will want tomorrow. At Datsun, we evaluate today but the focus is more on tomorrow and the day after. Secondly, what should be incorporated in a product to meet the aspirations. As a result, if it comes to be an SUV, then it is a SUV. It may come out to be a little different from the usual SUV, the way our Datsun Go or Go+ are different (from their competitors). SUVs, hatchbacks or sedans are a result of customer wants.
What kind of growth do you see for the segment where Datsun will be?
In India, the segment will evolve along with the evolution of customer behaviour. As far as business objective is concerned, today we say for the product line-up till 2016, our core offer will be below Rs 4 lakh.
In the course of the Datsun project, can you give us some key anecdotes that happened along the way?
Design to cost was an eye-opener. The more we work together, the less time we spend on the contract. My experience is that we took 10 to 11 months to source when we started a drawing with a cost. At Datsun, we began with idea generation. I spent a lot of time with my team for idea generation. Transparency is important and, if you say I trust you, one has to be transparent. We did all the sourcing of parts in five months flat, a record for Nissan.
Note: This interview was published in Autocar Professional’s December 15, 2013 issue.