After failing to revive its sales in the Indian market, Japanese automaker Nissan Motor has terminated the services of Hover Automotive India (HAI), the exclusive sales, marketing and distribution agent of Nissan-branded vehicles and parts in the country.
Nissan, which decided to go solo with the distribution of its Datsun-branded vehicles, has been exploring the idea of going independent for almost two years now, according to the people familiar with the development.
In a statement on Friday, Nissan India, the company's local unit, said it has assumed full responsibility for sales, marketing and distribution of all Nissan-branded vehicles and parts in India, with immediate effect.
It said its agreement with HAI has been terminated while more details about the business structure will be announced in due course.
"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," said Kenichiro Yomura, Nissan president, India operations.
Sales of Nissan have failed to pick despite several launches. As per the data by Society of Indian Automobile Manufacturers, company's total passenger vehicle sales declined 11% to 29303 units in fiscal 2014 during April-January as compared with the same period last year.
Hover has been working with Nissan in India since 2008.
Problems began in 2012 when Hover Automotive was appointed as a middle party -- the sole and exclusive distributor for managing the marketing, sales, after-sales service, training & dealer development, which led to discontent among dealers.
"Evalia (Nissan's multi purpose vehicle) failed, while there was no strategy to sell Micra and Sunny. The company is far behind in reaching its target of selling 1 lakh units in fiscal 2014. Hence, the decision was take to go solo for the Datsun brand," said a person familiar with the development.
Responding to Nissan's decision, Hover in its statement maintained that it expects to continue to work with Nissan.
"At HAI, we would like to inform all concerned that negotiations with Nissan are ongoing at this stage and it is premature to say any agreement regarding termination has occurred. HAI understands that Nissan wants to move quickly but it is possible only with the cooperation and consent of HAI and we look forward to working with Nissan and are hopeful of an amicable resolution," said Richard Spitzer, acting COO, HAI.
"Nissan does not have any legal basis for the termination of services. The management at HAI has taken strong exception to the announcement this morning by Nissan. HAI reserves all rights and remedies available and will pursue the necessary course of action to protect interest of its employees and stakeholders," he said.