$3,000 Nissan Will Reintroduce Datsun To A New Market

 @jiillx
on October 02 2012 12:39 PM
Carlos Ghosn, chairman and chief executive officer of Renault-Nissan Alliance, delivers a speech as he visits a Nissan factory in Iwaki
Carlos Ghosn, chairman and chief executive officer of Renault-Nissan Alliance, delivers a speech as he visits a Nissan factory in Iwaki. REUTERS

It’s been more than a quarter of a century since Nissan phased out its popular Datsun model, and now the company is in the beginning stage of a highly ambitious plan to resurrect the model, which they expect to arrive in 2014.

In March, CEO Carlos Ghosn announced that the Japanese auto maker was planning to revive its Datsun brand and introduce it into emerging markets in Indonesia, India and Russia.

And this week, in an interview with the Wall Street Journal, Ghosn has revealed that his company plans to price its most affordable model at between $3,000 and $5,000 – a price point which, if it can be achieved, would set a record low for a global automobile manufacturer.

Datsun cars and trucks were especially popular in the United States throughout in the 1960s and ‘70s, due to their fuel-efficiency during the Arab oil embargo. But the entire line was shelved in 1981 during a company rebranding campaign.

“Datsun signs came down, Nissan signs went up, and all the cars became Nissans. Overseas sales plummeted," said reporter Jackson Sellers, in an interview with Businessweek. "It took several years for Nissan to recover.”

“It was arguably a stupid thing when they did it because [Datsun had] great name recognition in the U.S,” added Jim Hall, principal of a U.S. automotive consulting firm.

Now, Nissan plans to release six new, extremely stripped-down versions of the once-popular model, for now only in those foreign markets. But to keep the price down they will most likely have to forego features that are commonplace in developed markets like the United States, like automatic transmission and a full supply of airbags.

According to the Nasdaq website, Nissan’s efforts to develop a new model to compete the emerging market category will likely cost the company around $1 billion. But not everyone sees a demand for Ghosn’s product.

Yukitoshi Funo, Executive Vice President of Developing Markets for Nissan’s chief competitor Toyota, called Ghosn’s strategy a blunder. “To think cheap cars will sell in emerging markets is a big mistake,’’ Funo told reporters in May. “Cars are symbols of family pride. They’re for driving to a picnic on a day off.’’

Toyota is also trying to get a bigger stake of business in emerging markets. The company reportedly plans to release eight new compact models by 2015. But Funo has said that their compact cars, which will be smaller than the Corolla model, will likely sell in the $12,000 range.

But Hall speculates that the rerelease of the Datsun brand is part of a concerted brand strategy to keep a more affordable car model separate from Nissan’s luxury line, Infiniti. “Rather than pull Nissan down, they’re adding an entry-level brand,” said Hall. “And it’s a heritage brand.”

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