Nissan reintroduces Datsun to emerging markets
The company wants to price its new model at $3,000 to $5,000, hoping to build back its global share.
Much to the chagrin of competitors like Toyota (TM) and Tata Motors (TTM), Nissan (NSANY) has announced plans to reintroduce its retired Datsun brand to emerging markets with a price range of $3,000 to $5,000.
Although Nissan did not release exact figures, its 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 (pictured) it sells in Mexico.
Yukitoshi Funo, an executive overseeing developing markets for Toyota, was quoted saying that "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.
Nissan has lost share 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.
Six new Datsun vehicles are planned for expected arrival starting in 2014. 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 CEO Carlos Ghosn believes reintroducing Datsun to the world will create excitement and help his expectations of boosting Nissan's global market share from its current 6% to 8% 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, particularly over whether it can tap into the emerging markets and expand its presence in the United States, where the price tag is likely to become largely inflated. 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 (FIATY) Dodge 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 rose less than 1% Tuesday to close at $16.84.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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