Shortly after it emerged that Nissan is looking to kill off the Datsun brand, an analyst says doing so would be the smart move.
Earlier this week, an individual with knowledge of Nissan’s financial strategy claimed the Japanese automaker intends on cutting about 300 billion yen ($2.8 billion) in annual fixed costs and book restructuring charges. As part of this, Nissan will reportedly phase out the Datsun brand.
Automotive editor at data and analytics company GlobalData, David Leggett, says the revived Datsun brand has had mixed results and should be axed given Nissan’s ongoing financial woes.
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“The revived Datsun brand was conceived in 2013 as a specialist provider of small, cheap models for low-income countries such as India, Indonesia and Russia,” Leggett said. “It has had mixed results, with the brand struggling against established competitors in some markets while its low volumes, low-cost price positioning and slim margins kept profitability elusive.” Leggett added that Nissan needs to focus on areas of its business that deliver higher profit margins.
“As Nissan reviews its global business and manufacturing footprint, it is becoming clearer that it needs to concentrate on selling higher margin products, such as electrified vehicles where it has a competitive advantage. Moreover, Nissan should avoid chasing market share – which was a primary driver of strategy in the past – to the long-term detriment of profitability,” he said. “To that end, the Datsun brand – and its additional costs – should be axed. Datsun is a legacy of excessive volume ambitions which the company never came close to fulfilling.”
The cost-cutting plans still need to be reviewed by Nissan’s board of directors. The automaker’s shares have plunged more than 40 per cent this year.
