The Renault-Nissan-Datsun group has been present in the Indian market since July 2009 even though Nissan had the Teana and X-Trail occupying a handful of showrooms much before that. Since then, the group (all three brands combined) has launched 14 models, withdrawn two, and experienced patchy success with most.
THIS IS PART 1 OF OUR ANALYSIS ON RENAULT-NISSAN-DATSUN. PART 2 WOULD BE PUBLISHED ON THURSDAY.
In doing so, the collective R-N-D group accounted for 94,162 units in dispatches in 2014, a 3.66% share of the Indian Passenger Vehicle market. Nearly all of the aforementioned 12 models account for very little in terms of sales and as we analyse later, most of them are plotting unhealthy looking lifecycle curves. The Renault Duster is the most significant model for the group and the only one to draw a respectable lifecycle curve plotted with twelve month rolling sales averages.
More about that later, for now, we start with the Duster.
As the adage goes, one must look at the brighter things in life first. We therefore start with the Renault Duster, a compact crossover made on a budget and a model that accidentally ticked all the right boxes for the Indian customer. It was a crossover with a look butch enough to convince customers that it could navigate through bushes, if needed. Thanks to its small size and monocoque construction, the fuel efficiency wasn’t bad. This was also aided by an engine which didn’t have an iota of fat on it. What also helped the Duster was the fact that it was built on the Logan’s ultra-inexpensive underpinnings. As a result, the price was low and the Duster managed to eat up into the market space of Executive sedans like the Hyundai Verna and Honda City. It also managed to entice buyers of regular hatchbacks in the Compact segment to move up and indulge.
EMMAAA/IAR INTRODUCES TWELVE MONTH ROLLING SALES AVERAGE
From now on, for the purpose of analysing sales volumes, EMMAAA would be using the 12-month rolling sales method. Under this system, we consider the last 12 month net sales as a better indicator of performance than the much used (and abused) monthly dispatch numbers.
This shift to a 12-month rolling sales volume ensures that any sudden spurts or declines in volumes are ironed out effectively. Also, since sales volumes in India are not exactly sales volumes, but dispatch volumes, a 12-month rolling volume system effectively negates anomalies introduced due to minor factors like temporary production disruptions, over-jealous sales managers or temporary logistics issues.
We have also noticed that manufacturers and models with small dispatch numbers often have problems in managing inventories. So dispatch numbers go through sharp jumps and depressions. The Rolling Average Sales Numbers method will effectively decrease the impacts of major spurts or inventory pile-ups.
More than a model’s initial success, which is relatively easy to achieve, EMMAAA believes that real success is in managing the lifecycle. That is where EMMAAA’s 10-year, Model Level, Passenger Vehicle forecast with a special emphasis on Model Freshness and Program Probability is one of the best tools to analyse the industry. Ask for a free sample and an introduction call with our lead analyst by mailing us at quickfire (at) emmaaa (dot) com.
After this awkward marketing message, we return to the Duster.
Unlike most of Renault-Nissan’s product range, the company has been able to manage the Duster’s lifecycle efficiently. Using the Rolling Twelve Month Average model and plotting the Duster’s lifecycle till date, Renault’s compact crossover manages to draw a beautiful bell curve with an elongated Profit Plateau. Monthly dispatches start at nearly 1200 units a month and the Duster accelerates to nearly 4000 units a month (rolling average) in six months. Post that, the Duster touches a peak of 4676 units in July 2013 and manages to stay at high dispatch levels for many months beyond that. As of December 2014, the Duster still maintains a rolling average of more than 3300 units.
But, beyond the Duster, there is little to cheer in the entire Renault-Nissan-Datsun portfolio. Most of the other models are struggling and some of them are beyond repair till the next generation model changes take effect.
DATSUN GO – IT JUST DOESN’T
The Datsun Go, perhaps the biggest reason to write this analysis, was launched with much expectations in March 2014. Here was a car with the size of the Swift and the price of an Alto. The Go boasted of great interior space and the company plonked in a 1.2-litre petrol engine if not for anything but as a selling point. In a way, the Go was the hatchback twin of the Fiat Linea – a car with the size that put it in a higher segment and a price that put it in the lower segment. Either way you look at it, it looked out of place though it also has the potential to be a game changer.
The sales figures were not much better from the Linea either. For the first three months, the Go barely managed a rolling average above 2000 units, touching a rolling average peak of 2379 units in April 2014, the second month of the launch of the car. For a car with the price tag rivalling a Maruti-Suzuki Alto, 2000 units a month was drawing a parallel with the Tata Nano.
Never a good company to have when one is talking about sales numbers.
Things turned worse right after that with the Go losing significant volume. From 2379 units in April 2014, the Go’s rolling average has come down to 1308 units in December 2014.
The Go is an interesting package — it has the price tag of the Maruti-Suzuki Alto, interior space of a much larger car, and interior quality that only its mother could love. It was the wrong product for India of the big cities as the customer there demanded better quality interiors and more features. Probably, the Go would have worked well in small towns. However, Nissan has a network of 121 dealers and only about 30-35 of them are in small towns.
The Go simply didn’t reach the people it was supposed to.
With Nissan preparing more models, an increase in dealers and touchpoint is imperative. This would ideally result in an increase in Go sales. However, in the short-term, the future of the Go appears fuzzy.
NISSAN MICRA – A MODEL ABANDONED MIDWAY
On the face of it, the Micra’s lifecycle curve, plotted using twelve-month rolling averages, appears perfect. The curve starts a bit low at the launch of the Micra is July 2010. It then accelerates upwards steadily and actually reaches its peak value in February 2012, 20 months into the lifecycle.
The decay over the next few months isn’t bad and the Micra loses only some momentum. However, post that, the Micra loses momentum rapidly and one year post the peak, volumes come down significantly.
However, that is not the main problem with Micra’s sales and the way its lifecycle has been managed. The bigger problem is that the Micra’s volumes never really take off in absolute terms. The peak rolling volumes achieved in Feb 2012 are all of 1585 units and over the last two years, the Micra’s rolling average has been dipping below 1000 units per month.
That’s not a great performance from a model that competes with the Maruti-Suzuki Swift, a car that manages 18000-20000 units month-after-month.
NISSAN SUNNY – HOT TO COLD SHARPLY
The Sunny is the Micra’s sedan cousin and has done better in the Indian market than the Micra did. Like the Micra, the Sunny starts low and gathers momentum over 3-4 quarters. Launched in September 2011, the Sunny’s first month volumes were all of 659 units. Peak twelve-month rolling average volumes of 2956 units were reached in December 2012. Post that, the Sunny has declined quite rapidly. More than that, post the peak in December 2012, the decline in rolling average dispatch volumes has been steady, straight line and without a pause.
This alarming speed of decline in twelve month average dispatch volumes has resulted in dispatches coming down from 2956 units in December 2012 to 542 units in December 2014, a fall of nearly 82% over the two-year period. Again, that is not impressive for a car that competes with the Maruti-Suzuki D’Zire (average monthly dispatches of 18000 units) at the lower end and the Honda City (average monthly dispatches of 4500 units) at the upper end.
At last count, Renault has 146 dealers while Nissan has only 121. Since both in isolation are small numbers, wise men with PowerPoints at the R-N-D HQ decided that it makes a lot of sense to rebadge the Micra and Sunny and sell them as Renaults. Critical differentiation in products was achieved through changing the grilles and tweaking the lamps – while the shape of the lamps stays the same (tweaking sheet metal is expensive), the combination within the units is changed in the Renault models. In the end, the effect is close to what Bollywood achieves with actors in double roles in the typical twins separated at birth cliche movies.
Hence were born the Pulse (Micra’s twin) and Scala (Sunny’s sister). In both cases, the lifecycle curves, plotted using twelve months rolling average volumes, have been poor, even worse than the Micra and Sunny respectively. For both the Pulse and Scala, the lifecycle curves start at near peak and deteriorate rapidly over the next few quarters. Considering the Pulse was launched in Jan 2012 and the Scala in September 2012, both have seen significant declines from their lifecycle peaks. The Pulse had a rolling average peak of 746 units, achieved in the first month of launch. Since then the dispatch volume rolling average is down nearly 69% to 233 units in December 2014.
The Scala does not fare any better — from a dispatch peak of 808 units, volumes are down 82% to 145 units in December 2014.
THIS IS PART 1 OF OUR ANALYSIS ON RENAULT-NISSAN-DATSUN. PART 2 WOULD BE PUBLISHED ON THURSDAY.