Monday, July 15, 2013

Brand magic

I usually don't get very interested in things like company names, logos, and identities.  But when I read in 1981 that Datsun was going to change its name in USA to Nissan, I was actually shocked.  How can a successful company do something so stupid? I wondered—aloud at times.

I have no problem understanding why a company whose name had been ruined by some product liability scandal, or similar, would want a name change.  But this was not the case here.  Datsun had a fanatically loyal following based on their 510 sedans which were both very inexpensive and reliable, and the 240 (260, 280) Z cars which would prove that the Japanese could build high-performace sports cars that regular people could afford.  This sort of brand loyalty was a LOT to discard over some corporate naming whim.  And to this day I have never read an account of how this happened that remotely considers the value of brand loyalty.

Not surprisingly, the customers were confused so Nissan spent millions over the next three years assuring folks that only the name had changed.  The dealers were pissed because it meant rebuilding a brand at the local level.  When Datsun became Nissan, they and Toyota had roughly the same market penetration in USA.  Now it's about half.

But "virtue" has triumphed.  Nissan is trying to build something very inexpensive for emerging markets like India.  And some genius in the corporate culture has decided to launch these ventures with a proven good-luck charm.  They are bringing back the Datsun name.  Oh, and the executive that presided over bringing back the Datsun name?  He's French.  Of course, the very idea that someone is devoting so much energy to making more cars for a world with WAY too many proves there is more market genius in this world than wisdom for resource planning.

Nissan revives Datsun to woo emerging market buyers

Japanese carmaker Nissan resurrected its iconic budget Datsun marque on Monday to woo a new generation of cost-conscious buyers in emerging markets.

Nissan, which in 1981 killed off the Datsun badge that was a favourite of legions of Western drivers, has launched a "next-generation" of the car to penetrate high-growth developing economies.

Nissan Motor Co chief executive Carlos Ghosn unveiled the first new Datsun model in the New Delhi satellite city of Gurgaon.

The car is set to go on sale early next year in India, the world's biggest small car market by volume.

"The Datsun is back!" Ghosn declared at the car's world premiere as he showed off the five-door hatchback which features a front-wheel drive, swept-back headlights and a sporty grill.

The 1.2-litre engine car will also be rolled out in Russia, South Africa and Indonesia in the next couple of years.

There are no immediate plans to sell it in the United States or Europe.

Ghosn, who also heads French carmaker Renault as part of a partnership, said Nissan has retained the Datsun brand concept of "reliability and fuel-efficiency" but "completely updated the product".

He gave no sticker price for the car, to be known as the Datsun GO, but said it would be less than 400,000 rupees ($6,678).

With the relaunched Datsun, which will be locally assembled, Nissan aims to fill a low-cost niche from which it has been absent, while keeping its main Nissan brand upmarket.

The Datsun, which first went on sale in 1931 and was known as one of the auto industry's iconic brands, was sold in 190 countries.

But Nissan scrapped the well-known name almost three decades ago, opting to use its own badge for the cars in what was a shock brand change for many loyal owners.

Ghosn said the new Datsun would give Nissan a "meaningful presence in high-growth markets".

Nissan aims to have a 10 percent market share in India by 2016, up from less than two percent last year.

In a couple of years, Nissan expects 60 percent of all auto sales globally to take place in high-growth markets such as India, Indonesia and Russia, Ghosn said.

In the United States, 500 out of every 1,000 people have cars, while in Russia the figure drops to 280. In South Africa, the number falls to 160 and it is 70 in Indonesia, he noted.

In India, which has a population of 1.2 billion and where global automakers see the greatest ultimate potential, car owners represent just 15 out of 1,000 people.

"There is a signficant transition (in buying patterns) in global markets," Ghosn said.

But Datsun will not face an easy ride in India's fiercely competitive auto segment, where market leader Maruti Suzuki, controlled by Japan's Suzuki Motor, sells its low-cost Alto hatchback for less than $5,000.

India's no-frills cheapest car, the Tata Nano, sells for a minimum 150,000 rupees or just under $3,000 but has not fared well amid product image problems.

The Datsun rebirth also comes as the Indian market is going through a tough period, with sales shrinking last year for the first time in a decade against the backdrop of a sharply slowing economy.

"It looks like a good product but it will be tough going -- they're starting essentially from zero in this segment," auto analyst Deepesh Rathore told AFP.

Datsun's revival follow Ghosn's success in pushing Renault's low-cost Dacia marque which has been overtaking rivals in Europe's contracting car market. more

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