Nissan, Japan’s No2 auto maker, provides further evidence for our argument in Boom, Gloom and the New Normal that affordability is becoming the key driver for sales and profits.
It is now considering reviving the low-cost Datsun brand as it seeks to grow its sales in countries such as India, Indonesia and Russia. The Wall Street Journal notes that Nissan is “seeking to grab 8% of the global market by 2017″ by focusing on “China, India and other emerging economies with low per capita incomes”.
As the picture shows, the Datsun was originally aimed at the market for small, sporty and fuel-efficient cars. This makes it well-suited to today’s market. Apparently the new model will retail at $6k, and be launched in 2014. Nissan hopes to sell 300k a year.
Nissan’s move highlights a growing trend amongst automakers such as Ford and Renault, as we highlighted in chapter 7. They have all recognised that the phrase ‘middle class’ means something very different in emerging economies. Typically it refers to someone with an income under $20/day.
Companies who follow them in focusing on affordability will likely find themselves rewarded with long-term sales and profit growth. But those who rely on policymakers returning us to the 1982-2007 supercycle, when ‘value-in-use’ ruled, could find life becoming very difficult indeed.