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.
WEEEE HOOOO!!!!. bring it back Nissan. for $5000, i can buy 5 cars for the price of ONE. I'm with whoseyourauntie (significant other using her comp.had 280z with over 365,000 miles,), millions of people that lost their homes in the CRASH will be sooo happy,along with young college students.. I DON'T KNOW WHAT KIND OF THINKING IT IS THAT BUYING A $25000 CAR IS OK. AFTER MILLIONS OF PEOPLE WENT ON FORECLOSURE
My first new car was a Datsun B-210 'Honeybee". Just a car, heater, radio, no carpet. It was the BEST car ever!!!! I drove it 280,000 miles before I finally bought a new one and the only reason I did then was I wanted air conditioning. I blew a tire on it once and it was so well balanced, I was able to drive home on 3 wheels.
Bring them back, Nissan! We miss our Datsuns!!!
I spent 30 years in the field working for a major auto manufacturer. What I saw over time was a trend where dealers were more interested in selling one vehicle for $1,600 profit than 16 for $100 profit.
So I doubt a $3,000 Nissan, would be popular for dealers in the US because it would probably have a low profit margin.
Now days it appears if the car is not a rolling IPod, IPad, it is not desirable or so dealers and advertisements would have you believe. Try finding a basic transportation vehicle with minimum accessories, they are few and far between.
I remember it was not that long ago that KIA one of the cheapest cars available had a two for one promotion. Today their pricing is compatible with most of their competitors for the same class vehicle and they are now loaded with all bells and whistles.
Copyright © 2014 Microsoft. All rights reserved.
Stocks drift lower and bonds are hit as investors await the Fed. Prepare for higher volatility this week.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.