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On the Road to No.1 in Russia

Aug. 29 – Moscow – The Moscow International Motor Show kicked off Wednesday, and Nissan Executive Vice President Andy Palmer says the carmaker’s top European market, Russia, and its manufacturing base have never been more important.

1. Russia is such a big market for Nissan now and the Almera is part of expectations ahead. Put in perspective what’s coming for Russia in the near term.

EVP Palmer:

First, let me reiterate how important Russia is. Obviously, everyone knows it’s part of the so-called BRIICs – Brazil, Russia, India – Indonesia – and China. It’s obviously part of the big-growth economies, but we consider Russia to be part of Europe, and for Nissan Russia is already our biggest market. Globally, for Nissan it’s already our fifth biggest market and we’ve just started. The penetration of motor cars per 1,000 people in Russia is only 250 – of 1,000 people, only 250 own a motor car. If we look at the United States that’s about 800. If we look at Europe that’s about 600, so the potential for growth, times the size of the population, means there’s an enormous potential here.

So far Nissan has an excellent brand image, mainly because we’ve entered with vehicles like the Teana, X-Trail, Qashqai, Patrol and Murano. We’ve created this aura around the brand. Our mantra is “Innovation and Excitement for Everyone.” ‘For everyone’ means we obviously needed an entry car.

What we’ve created here is the entry car, specifically for Russia. Why? Because there are some specific needs. We needed a big car, we needed a very competitive price, we needed something that was capable of dealing with the road conditions. We needed 160 mm of clearance. We needed something capable of dealing with the weather here. We’ve got special corrosion-resistant chrome, we’ve got 2 mm of steel underneath the compartment of the car to protect from stones. So, we’ve completely re-engineered the car to meet with Russian customer needs.

2. Localization is a big part of the message and that includes producing cars here in Russia. Nissan is investing substantially. Can you tell us what that rollout will entail.

EVP:

This is a game-changer in this market. This is a car that’s going to compete with the Polo sedan, which is a B Segment car. Look at this car: It’s at least C Segment in size, and if I open the backdoor, it’s cavernous. It has the leg room of a D Segment Teana, so the only way you can possibly hope to create that means your cost base has to be right. And, the only way your cost base is going to be right is with heavy localization.

The advantage Nissan has with its collaboration with AvtoVAZ opens up a wide capability in terms of the supply base, but also allows us to manufacture this car on the new production line at Togliatti, and that’s basically how we managed to engineer what’s really a game-changer. It’s a C-D Segment car at a B Segment price, basically thanks to heavy localization, thanks to the collaboration with AvtoVAZ.

3. Earlier this year Datsun announced plans for Russia, including production at Togliatti. How large a market could Russia become for Datsun?

EVP:

At least a third of the volume from the Nissan Motor Co. could come from Datsun. In the mid-term one could anticipate around about 100,000 units from the two Datsun cars we’re launching in 2014. We’re aiming for about 10% market share, which means about 400,000 cars.

If you think about it, we’re today tracking at around 180,000 units this year. This car alone is going conservatively to add another 70,000, Datsun 100,000, and then new cars are coming. We can really take a very significant slice of this market. The very clear intention is immediately to be the Japanese No.1, and we basically achieve that. The next step is to be Asian No.1 – beat Hyundai and Kia. That’s definitely within our sites now, and beyond that, why not be the biggest foreign brand?  We’ve got the assets, we’ve got the car, and we’ve got the collaboration with AvtoVAZ. We can do it.

4. A lot of positive economic news lately for Russia. Crystal balling, where is Russia five years from now?

EVP:

There’s no doubt in my mind that Russia will become the biggest European market, and I don’t think that’s very far away – right around the corner – 2013 or 2014, particularly with the difficulties that Europe is experiencing. It’s a big market and will continue to accelerate.

Just think about the size of the population and that 250 of every 1,000 own a car, and they aspire to be the same as the America – 800 cars for every 1,000 people. The potential here is explosive. This may not be a market as large as China, but it’s pretty darn close.

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