Nissan eyes completely knocked down in volume gambit

Carlos Ghosn, chief executive officer, Renault-Nissan alliance, during his visit this week to India made it clear he wants to build cars locally in order to become a volume player rather than a niche player.

Keeping that in mind, Nissan India, which sells Teana, a sedan, and XTrail, a sports utility vehicle, as completely built units (CBU) is considering to get these cars into the Indian market through the completely knocked down (CKD) route.

Gilles Normand, corporate vice-president, Nissan Motor Company (India, Africa and Middle East Region), said, “We are considering the possibility of producing or locally assembling Teana and XTrail in India soon.”

Ghosn had said in a conference in Chennai this week, “Last year, we sold around 200-300 cars only. You cannot sell cars in India at a lower cost when you import them. Importing cars will make us a niche car manufacturer and never a full-fledged player, and to become one we have to manufacture, source products locally in order to meet local needs.”

Currently, the import duty on a CBU is around 110% while a CKD attracts duty of around 10%. The move to CKD would help Nissan bring down costs substantially.

According to a source close to the development, the cost of Teana will come down from Rs 25 lakh at present to Rs 18 lakh and an almost similar price reduction of 28% would take place in XTrail as well.

Teana competes in the lower end of the D segment, which has cars like Toyota Camry (Rs 24-22 lakh), Skoda Superb (Rs 18-25 lakh) and Honda Accord (Rs 26 lakh).

Despite being competitively priced, it sells only about 20 units a month followed by Camry which sells 30 units and the highest sales in this segment are contributed by Superb with 290 units a month and Honda Accord 240 units. XTrail priced at Rs 20 lakh competes with Ford Endeavour and Honda CR-V.

Normand said, “If we want to increase our share in the market we will have to reduce the price of our products and gain volumes.”