With economic turmoil driving down demand for new cars in the U.S. and Europe, many automakers have turned their ambitions toward the developing economies of China, Southern Africa and the Indian subcontinent. Serving the needs of consumers in these markets, however, requires fundamental changes in the way vehicles are designed, manufactured and marketed.
Japan’s No. 3 automaker, Nissan Motor Company, plans just such an undertaking when it launches its new “V” small car platform in India, Thailand and China next March. The “V” stands for versatility which Nissan believes is a key characteristic for success in the developing world.
Nissan began work on the V platform in 2005 in preparation for its first-ever launch in these emerging markets. The timing of the launch is critical according to Vincent Cobee who is overseeing the platform launch. Cobee says, “Europe can wait. India cannot.” Competition within these markets includes domestic automakers, foreign manufacturers and alliances between the two. Nissan appears intent on gaining a foothold with small, versatile, affordable vehicles and by sourcing between 80% and 90% of its parts needs locally.
Automakers have learned in recent years that global manufacturing integration is key to success, especially in under-developed markets.
The V platform focuses on simplicity in every aspect. New V cars will consist of about 18% fewer parts than the automaker’s current compact modes. For example, Nissan engineers have condensed front seats down to 50 separate components as opposed to the usual 85 parts that comprise the front seats found in their current small cars.
Nissan appears to have learned from the successes of domestic automakers in these markets, including India’s Tata Motors, whose Nano micro-car is the epitome of simplicity. Simplifying the manufacturing process allows savvy automakers to produce popular vehicles on shoestring budgets and pass those savings along to consumers. In its home country, the Nano sells for the equivalent of 100,000 rupees (about $2,200). Tata markets the Nano as “the world’s cheapest car” but many industry analysts question Tata’s ability to turn a profit at that price point. Many speculate that it may be break-even or even losing the company money in order to generate awareness and create demand. That speculation is fueled, in part, by the fact that Tata has only guaranteed the 100,000 rupee pricing to early adopters.
Nissan aims to sell about a million “V” cars by 2013 which appears to many to be overly optimistic considering the company posted global sales of 3.4 million in 2008.
Following the launch of the V hatchback in 2010, Nissan plans to introduce a V sedan and V multipurpose vehicle in 2011.
Although the V platform was designed with emerging markets in mind, Nissan has said that it will begin exporting vehicles manufactured at its Chennai, India factory to European markets and plans to begin making and selling V cars in the U.S. as soon as 2011.