Nissan did too little too late in India and Honda is not coming to save it

Nissan executives constantly highlighted their ‘Arc’ business strategy for India and said that three new car models were also on the cards | Photo: Kushan Mitra

When the ‘Representative Directors’ of Honda, Nissan and Mitsubishi took the stage in Tokyo to announce that they were potentially looking at merging their operations, it came as quite a shock to the automotive industry. This was the only way, the companies declared, to stand up to competition from Chinese automobile manufacturers such as SAIC  –  operating as MG Motor in India – and BYD, which are currently dominating the electric vehicle industry. But now, Nissan and Honda have called off the marriage.

It was surmised that this was a shotgun union engineered by Japan’s Ministry of Economy, Trade and Industry (METI) to save Nissan and Mitsubishi by merging them into a well-capitalised and technology-savvy Honda. Japan’s largest carmaker, Toyota, has already deepened collaboration with Suzuki Motor Corporation, the parent company of Maruti-Suzuki.

The story of Nissan is unfortunate. It had been saved once by the legendary executive Carlos Ghosn, who brought it into an alliance with French carmaker Renault. Ghosn cut costs brutally, even shuttering factories in Japan, unheard of in the country. He even focused heavily on China, tying up with Dongfeng Motor Group. At one point of time, China accounted for over half of Nissan’s sales. Ghosn also realised the potential of the Indian market and was captivated by the Tata Nano microcar. A link-up with Bajaj Auto to produce a quadricycle, the Qute, did not materialise, and Ghosn brought the Datsun brand back to life.

India and Nissan

Nissan used to be sold as Datsun across the world, and Ghosn brought back the brand for low-cost markets such as India, Indonesia and Russia. The carmaker even launched the compact Datsun Go at a large function in Gurugram’s now-defunct Kingdom of Dreams.

Unfortunately, the Go never took off in India. Nor did the earlier Nissan products, the Micra and the Sunny. The Terrano and Kicks SUVs based on Renault’s Duster platform, did modestly well, but Nissan never captured the imagination of Indians. Currently, the carmaker’s main volume seller in India is the Magnite Subcompact-SUV, with monthly sales of about 2,000-2,500 units. In comparison, the Tata Nexon and Maruti Brezza regularly move approximately 15,000 units every month.

Even the recently launched and much more expensive Kia Syros registered wholesales of over 5,500 units in January. The Magnite, however, does outsell the Renault Kiger, with which it shares a platform. Nissan’s other product in India is the fully-imported X-Trail, which costs Rs 49.92 lakh (ex-showroom Delhi), well over its direct competitors such as the Hyundai Tucson and at the same level as the new BMW iX1 20L, which I wrote about last week. The X-Trail offered in India is the same car as the Rogue in the United States, which is one generation newer.

Nissan’s endgame

It was Ghosn’s dramatic departure from Nissan, and escape from Japan in a musical instrument box while out on bail, that began the endgame for the Japanese carmaker. Ghosn claimed to have been the victim of an internal coup d’etat – he was arrested over allegations of misusing company funds and understating his salary. But the fact is that the US Securities and Exchanges Commission laid charges against Nissan, and Ghosn makes one doubt his story. Whatever the truth might be, and as epic as Ghosn’s escape was, Nissan’s future is not at all rosy.

Nissan did have a first-mover advantage in the EV market with the Nissan Leaf, but today, it is not just falling behind the Chinese; once Suzuki launches the e-Vitara, it will be well behind its Japanese peers too. Dongfeng Nissan has been seeing sales drop dramatically and even in North America, Nissan sales have been dropping off a cliff despite seemingly attractive vehicles such as the 2025 Nissan Kicks.

And then, when it comes to Nissan operations in India, there is the elephant in the room – the huge 400,000-unit capacity plant jointly owned by Nissan and Renault at Oragadam outside Chennai. The plant is a 51-49 partnership with Nissan in the lead. Of course, Nissan and Renault executives in India were blindsided by the initial announcement and had no clue of what was going on in Tokyo in some private conversations. But the question of the plant is vital because, given recent events, the alliance between the firms is in tatters.

It was expected that Renault and Nissan would launch two new vehicles each in 2026 – Renault the third-generation Duster and its three-row variant, the Bigster, and Nissan its badge-engineered versions of the cars. Nissan executives constantly highlighted their ‘Arc’ business strategy for India and said that three new car models were also on the cards. But this all seems like a case of ‘too little, too late’ for India as the market shifts dramatically toward EVs.

While Renault still has the support of the French state, Nissan finds itself in nowhere land. What becomes of Oragadam, though, is a question that will need to be answered. It would have needed to be answered even if Honda successfully took over Nissan, as even Honda is not a large-scale player in India. Will another manufacturer pick up this huge facility, much like Tata Motors bought Ford’s Sanand plant in Gujarat? With enough capacity in India for the time being, will the plant continue for a few years like two parents staying together for the sake of their child?

Without Honda to save Nissan, it could very well be a Chinese manufacturer that rescues it. Just like Lenovo bought ThinkPad and Motorola, and SAIC bought out MG. There has been speculation that Chinese mobile phone and consumer durables brand Xiaomi might buy Nissan, and the Japanese government with its hands tied might allow it in order to save jobs. But the two countries don’t have the best of relations. It might make sense, though, as Xiaomi wants to enter the car business and has even showcased the SU7 electric SUV.

Whatever happens, looking at this through a purely Indian lens, things are not all clear. And with thousands of jobs on the line in Tamil Nadu and across the country, maybe the government should look into this.

@kushanmitra is an automotive journalist based in New Delhi. Views are personal.

(Edited by Zoya Bhatti)