 "Andy Palmer")
There are things an MNC can get wrong when it moves into a new market but it is fine as long as one learns from it, Andy Palmer tells Devina Joshi
Nissan India is struggling to go beyond a single-digit market share since its foray into India. While the auto sector itself isn't in great shape, what is your strategy to be counted among the top brands in the consumer's consideration set?
Our original strategy when we set out five years ago was clear - to build a big factory in Chennai for achieving economies of scale, get the supply chain in order, fill the factory with cars for exports because we have a guaranteed market for it, and grow the market in India at a pace at which we could. Broadly that's not changed. We continue to have a strong demand for exports. I suppose that is a nice problem to have. The demand for Micra after minor changes, for instance, has grown in Europe.
Among the things that did change: we wanted to disrupt the distribution model in India. We were wise enough to understand that India is hard to understand. We wanted a series of partnerships in India, not knowing that Indians understand India better than we do. Some of them worked, some didn't. We had a flirtation with Bajaj at one moment, which didn't work out: we had two different images of what one product should be. We had an issue with HAI, our distributor, which is unfortunate, as your distribution model is key to sales. We have changed our model and are now doing it ourselves.
In the first quarter after we changed our model, we have grown our sales volume by 142 per cent in an industry where volume is declining. Being in charge of our own distribution and being able to bring Indians into the company and run it with the Nissan way of working, is certainly helping. Did it lead to a delay? I guess we lost about a year. Nissan India has a 2.2 per cent market share now. We have launched new versions for the Sunny and the Evalia. Hopefully we're back on trajectory and seek a 10 per cent market share in a few years.
With so many cars going in for remodelling, was there a problem in understanding the needs of the Indian consumer? How has Nissan customised its products for the Indian car market?
Yes, indeed, there was a problem. Evalia is probably the most obvious example where we took frugality to mean cheap, and it doesn't. You can't sell a van in a passenger car market. It was a product designed for Europe - a van and combi (where a van is treated as a van on weekdays and a car on weekends) market. The front of the car is well-executed, but the back of the car is relatively bare, for stocking goods etc. That wouldn't work in India, where people usually have chauffeurs driving the car with adults sitting in the rear - possibly the owner of the car. Suddenly, the approach is nonsense, because you have cheap execution where the owner is sitting.
So we had to turn the business model on its head and realise the rear is really important. We had to fully trim the inside of the Evalia, put the air-conditioning in, introduce captain seats, and change the definition of what frugal means. We needed Sunny to be more prestigious in its execution, with a heightened awareness of safety in India.
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So there are things that we got wrong but it is fine as long as we learn from it. That's the reason we established RNTBCI (Renault Nissan Technology Business Centre India), our R&D centre, where we have Indians designing for Indians.
Do you see the connected car becoming a reality anytime soon in India, considering that technologies like GPS haven't taken off very well here?
It is inevitable. Partially, your car is already connected because you have a mobile phone in your back pocket which works as a GPS device. There are two ways to approach a connected car - and they're both relevant. The first is you embed a phone in your car. Say if you buy a Nissan Leaf or an Infinity q50, that's already done… every time you push on your navigation screen, the car transmits data like the amount of charge on your battery etc - back to us. It is really useful data that we can help you use as a driver.
The second way is through a GPS-connected mobile phone. The problem with this system is, all mobile phone brands don't use the same global standards. But it is interesting - what you search online could be interesting to me as I could profile you depending on what things interest you. Our strategy is to embed your personal communication device in every car, which will generate data streams, both ways.
There are four social trends which will determine the nature of cars in the future. First, megacities - 70 per cent of the world's population will live in cities by 2050. Second, the Gen Z or millennials - people who have been brought up on devices and social media with a completely different attitude towards confidentiality than my generation. Third, the seniors - people are living and are active far longer, and fourth, empowered women, who will have a lot more influence on purchase decisions of cars and also have connected cars designed for them and their needs to multi-task.
Is Nissan's product planning strategy mostly reactive in nature or do you invest in anticipating expectations of the auto buyer and forecasts on the sector's growth?
I should think we moved a long time ago from reactionary to 'creatory'. Part of my job is to anticipate the trends I spoke of earlier, and give consumers what they need. That is the reason we created the Qashkai, the Juke or even the Evalia. We didn't create them because of competitors in that space; we identified that space. We tend to lead markets, in that sense. It means that we can be different, we can be provocative and also, sometimes, we can be wrong.
What are some of the thumb rules for product development at Nissan that are adhered to no matter what?
We focus on a customer, not on a segment. We don't focus on anonymous clusters, we focus on an individual. We typically launch around 10 cars a year, and for any car we profile a person. That person is representative of that car and, therefore, of the type of people we're looking for. Like when we created the Juke, the individual was controversial as a result of which the Juke is a controversial car to have.
