Nissan could kill Datsun as it seeks to cut costs, report says
The fact Datsun exists may be news to you, too
Nissan relaunched the Datsun brand back in 2013 as a budget brand for a number of markets in Asia and Europe after putting it on ice back in 1986. At the time, the return of Datsun was cautiously hailed as a positive marketing move, as Nissan sought to expand its presence and manufacturing in markets in Asia and Eastern Europe, positioning the marque as a competitor to other budget brands.
Reuters now reports that Nissan is likely to terminate the Datsun brand, amid a shakier financial position that developed over the past two years. Nissan’s financial health has deteriorated rapidly in the past several months; the automaker announced plans to cut 10 percent of its lineup over the next three years and to shed at least 12,500 jobs worldwide.
At the time of Datsun’s relaunch, Nissan was a slightly different company, chasing volume under CEO Carlos Ghosn and expanding its model lineup across all brands, including Nissan and Infiniti. The chase for volume and for finding new customers in new markets was one of the main motivating factors behind the Datsun relaunch. This strategy worked well during the years of the economic recovery, when demand for less expensive cars was higher than it is now. However, in recent years, in order to chase volume, Nissan had to put up with low per-unit profits, excess production capacity and a much lower operating profit margin than other automakers fielding cars in the same segments. While the volume push worked early on, it’s fair to say that it has stalled over the past year, creating a dramatic drop in profit that halfway through 2019 plummeted to 0.1 percent, down from 4 percent in 2018, which was already a precarious position.
The arrest of former CEO Carlos Ghosn a year ago contributed to a growing crisis within the automaker, creating tension in its partnership with Renault, a partnership that rapidly began to deteriorate in Ghosn’s absence.
Now attempting to implement a “performance recovery plan,” Reuters reports, the automaker is looking to reduce production capacity in all factories except for those located in China and to reduce the practice of selling cars to rental fleets in the U.S., which tends to hurt profitability and has undermined Nissan’s brand image stateside.
When it comes to Datsun, the brand has plants in Russia, India and Indonesia, with all models aimed largely at those domestic markets. Reuters notes that sales in Russia rose 21 percent this year, to 16,514 units, but in other markets like Indonesia, the Datsun models began competing with Nissan models for sales.
As Nissan begins to unwind Ghosn’s expansionist plans, Datsun could be the budget brand that gets the ax, while Mitsubishi, in which Nissan recently acquired a significant stake, takes up the position of the budget brand under Nissan.