Nissan Motor India has finally severed ties with its sales, distribution and marketing partner Hover Automotive India (HAI), and in doing so has crossed its biggest hurdle in the Indian market. HAI has been unable to maximise Nissan’s potential in the Indian market, despite the launch of some competitive products. Nissan has now taken charge of the crucial functions of sales, service and marketing.
The alliance with HAI began when the Japanese carmaker entered India in 2004, and the company’s intention then was to focus on kick-starting assembly and manufacturing proceedings. As a result, it was decided that the tasks of sales, distribution and marketing of its models would be offloaded to a third-party company with experience in a market that was new to Nissan, and HAI was chosen.
However, since then, this has only proven to be a thorn in Nissan’s side. While the vehicles it has brought to India have been very competent and more often than not competitively priced, the major complaint has been poor sales planning and dealer support, which has resulted in dismal sales. Nissan’s relationship with Hover in the past few months has been acrimonious, and things came to a head recently with the Japanese company announcing that it would be taking charge of the Datsun portfolio itself, selling the reborn budget brand’s cars through its own network. And now with this recent announcement that it will be handling marketing, sales and service of Nissan products as well, all ties with HAI are now cut.
Commenting on the decision, Kenichiro Yomura, Nissan president, India Operations, said, "Nissan is now at a point of maturity in India where the time is right to establish our own marketing and distribution operations. Nissan’s priority will be to ensure a smooth transition from current operations. We remain committed to our customers and will continue to deliver high quality products and services."
Just how will this affect Nissan’s current operating procedure? In a letter to dealers nationwide, Yomura said, "There could be some short-term challenges in terms of manpower limitations. However, robust contingency planning is already underway and we are very confident to overcome any issues with your strong support and by prioritising customer satisfaction."
So while it’s clear that some amount of internal restructuring is underway within Nissan Motor India, the real fruits of this effort will have to be seen over the course of 2014. In the 10-month April 2013-January 2014 period, Nissan sold 29,303 units, down 11.02 percent over sales a year prior, while in January 2014 alone, it sold a total of 5,183 cars, posting a year-on-year growth of 26.79 percent. If this is an ongoing trend, then we’ll know that this decision has been fruitful.