Nissan targets Datsun at the $3000 auto market

Datsun2.pngIt would be nice to believe that there are billions of middle-class people in emerging countries. And even nicer to imagine they are just waiting for the chance to buy expensive Western goods. Sadly, the truth is more prosaic. 96% of China’s population earn less than $7600/year. Their daily wage would be an hourly wage in the West.

But this wishful thinking shouldn’t blind companies to the real opportunity that these people represent. As we describe in ‘Boom, Gloom and the New Normal’, one lasting result of the 1982-2007 Supercycle is that it lifted them out of poverty (normally classed as <$2/day):

• 60% of China's population earned less than $2/day in 1991
• Today, only 6% earn less than this

One of the great opportunities of the next few decades is to help these people slowly transition from bicycle to motorbike and then to a small car. Tata pioneered this approach with their Nano car in India, which sells for ~$3k, and may still succeed. We highlight the learning from their efforts as a Case Study in chapter 7.

Now the Wall Street Journal reports that Nissan, the major Japanese company linked with Renault, are to target the same opportunity. The blog would put a lot of money on them succeeding. They have the benefit of 8 years experience in the low-cost market with the Dacia to guide them. And their revival of the Datsun brand is a clear sign of their intent.

Any company selling into the auto market should get on a flight to Tokyo today to talk to them. The key lesson from the Nano experience is that partnership between suppliers and customer is critical to success. And this could be a very big success indeed.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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