Nissan's 7-year-old partnership with Hover hits speed bump as car-maker eyes 'options'

Written by Roudra Bhattacharya | New Delhi | Updated: Feb 6 2013, 23:17pm hrs
The seven-year-old partnership between Nissan Motor and its master franchise for marketing and distribution in India, Hover Automotive, may be on the rocks. Unhappy with recurrent problems in the sales network, the Japanese carmaker is now considering taking distribution under its own fold in order to support its plans to rapidly grow volumes in India by adding 10 new models by 2016, to the six on offer today.

This move follows a protest by Nissan dealers in October last year over the appointment of Hover as a middle party between them and the company, after which the dealers formed a separate body, Nissan Dealer Forum, to interact with the management.

Nissan had appointed Hover in 2005, and, currently, has over 80 dealers in the country.

Takayuki Ishida, MD & CEO of Nissan Motor India told FE that though Hover continues to be the distribution partner for now, the company is considering other options on the table especially as it prepares to introduce its low-cost Datsun car brand in 2014.

Datsun is expected to initially start with a compact hatchback, followed by an entry sedan and a small SUV.

We are not currently 100% satisfied with the dealerships and the unrest has impacted sales. Opinions are different in a growing stage. We are ramping up and one partner may want to go one way, while the other wants something else. There are some issues we need to rectify, he said.

He added, We are studying if we want to stay with Hover for Datsun, a decision is likely before the end of the year.

Nissans marketing model in India is unique among the major players, given that the only other company to appoint a local partner for marketing is low volume and utility vehicle focussed, Mitsubishi.

However, unlike Nissans large manufacturing base in India, Mitsubishi relies on local partner Hindustan Motors plant near Chennai for production as well.

To grow volumes, the carmaker will introduce a compact SUV in the next fiscal, likely based on alliance partner Renaults Duster. Other models being considered are a small car below its current model, Micra, and a C-segment sedan likely the Sylphy.

Nissan aims to double volumes in FY14, after posting around 50% growth in the current fiscal at around 50,000 units. Among locally produced models, the current top-seller is the Micra, followed by the Sunny entry sedan.

The market is tough, but we dont want to lose out on our brand by offering high discounts like the competition. Our market coverage is not much, so we to introduce new models from Nissans global resource, Ishida added. The number of dealerships will also be go up from 95 in March 2013 to 140 next year.

Nissan shares a manufacturing facility near Chennai with Renault, which can make around 4 lakh cars a year. With local operations starting in 2005, the company is already the third-largest carmaker in India sending close to 70% of its local production to markets in Europe and elsewhere.