MARKET

Sri Lanka’s automotive industry has recorded rapid growth despite the challenges posed by rising government taxes and escalating fuel prices. Vehicle import-related taxes imposed on passenger cars with an engine capacity of 1500cc or more have risen over twofold within the space of two years, from January 2004 to January 2006. The tax on a 1500cc passenger car, which stood at 97% of the Cost, Insurance and Freight (CIF) value in January 2004, increased to 149% of the CIF value by January 2006. This resulted in a significant price increase in passenger cars in the local market. In this context, vehicle traders in Sri Lanka claim that the price of a car in the local market is often more than three times its price in the country of origin.

Crude oil prices, which were just above US$ 30 a barrel in January 2004 have risen to world record-high levels, even touching US$ 75 per barrel (Source: Central Bank Weekly Selected Economic Indicators). These factors have influenced the choice of car buyers, who are opting for smaller vehicles with lower engine capacities.

From among European, US and Japanese car manufacturers that have competed vigorously to meet the needs and demands of Sri Lankan customers, the Nissan brand has created sufficient interest to gain and retain market leadership until the end of 2005. In mid 2001, Nissan clinched the overall market-leadership position for passenger cars in Sri Lanka from Toyota, the leading car manufacturer in Japan, with over 50% of domestic market share. Nissan – together with its alliance partner, Renault – is also the fifth largest manufacturer in terms of production in the world, in a 2002 ranking. Despite the brand values and worldwide reputation of Toyota, Nissan has gained popularity in the local market, as indicated by vehicle-registration figures released by the Registrar of Motor Vehicles (RMV) in Sri Lanka.

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ACHIEVEMENTS

RMV figures indicate that in 2002, in which year a total of 11,458 motor cars – brand new and reconditioned – were registered, Nissan gained a 39% market share (4,511 units sold) and wrested pole position from Toyota, which garnered a 30.5% of the market (3,499 units). Since 2002, Nissan has maintained market leadership in terms of units sold.

In 2003, before new taxes impacted heavily on the local automotive industry, Nissan recorded a market share of 38.1% – much higher than its arch-rival Toyota, which managed only a 22.9% share. Importantly, 2003 was a landmark year for Sri Lanka’s automotive industry, because motor car registrations grew by 84% compared to the previous year to reach 21,115 – the highest recorded growth in the new millennium. Nissan’s local market share declined to 34% in 2004, with the total number of units sold reducing to 6,649, from a total of 8,053 units sold in 2003. Though its market share declined to 22% (3,816 units) in 2005, with total registrations numbering 17,276, Nissan continued to reign supreme from 2002 to end 2005, which is a significant achievement.

The leading distributor for the Nissan brand in Sri Lanka, Associated Motorways Ltd. (AMW) attributed this decline in sales to the local tax regime’s focus on engine capacity – especially the 1500cc and above category – after October 2004. Before the tax hikes, AMW was dealing in vehicles with engine capacities of 1600cc and above. When taxes were increased for vehicles above 1500cc engine capacity in 2004, Nissan sales in Sri Lanka were adversely affected, resulting in AMW’s brand-new Nissan car sales plummeting to nearly zero. But the brand’s popularity ensured its leadership position, despite this setback. Reconditioned vehicle imports by retailers other than AMW still managed to cater to the demand, which ensured that Nissan continued to lead the market, which is a significant achievement. In 2005, Nissan was able to address this issue by offering models with engine capacities that suited local tax structures.

Another significant achievement is that Nissan has been able to surpass its reputable rival, Toyota, in the local market. Globally, Toyota is the preferred choice over Nissan and is considered a stronger brand. But in Sri Lanka, Nissan leads the market, with Toyota coming in second.

Compared to Toyota’s selling price, Nissan’s equivalents range in close proximity, with a mere US$ 750 or Rs. 75,000 separating the two brands. However, Nissan’s slightly lower price compared to that of Toyota is not why it is ahead in the local market. Nissan’s popularity and reliability, the reputation of its agents and dealer network, after-sales services and the availability of spare parts are some factors that have combined to enable the brand’s market leadership.

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HISTORY

AMW, established in 1949 by Sir Cyril de Zoysa, claims to be the second-oldest distributor for the Nissan brand of motor vehicles in the Asian region – the oldest being Siam Motors of Thailand. In an era when European car manufacturers were dominating the local car industry, AMW bade for the Nissan dealership here in 1957, perhaps because it envisioned a future rise in demand for Japanese cars. Today, AMW is reaping the rich dividends of the wise decision made by its founders. The company has gone from strength to strength to record robust growth, which is partly attributed to its Nissan dealership. And AMW has invested significantly to popularise Nissan in Sri Lanka.

Nissan’s brand strength rose sharply after March 1999, when the cash-strapped Japanese carmaker formed an alliance with Renault, a well-established French manufacturer. Nissan’s star was on the decline for eight consecutive years before its alliance with Renault, which was then led by CEO Carlos Ghosn. Soon after the Nissan-Renault alliance, Ghosn took over as Chief Operating Officer of Nissan and is credited with the brand’s successes and exploits thereafter. The alliance, which has been recognised as a rare success story for mergers worldwide, helped both manufacturers to establish themselves jointly as the world’s fifth largest car producer in 2002. General Motors, Ford, Toyota and the VW Group are the four leading car manufacturers today.

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PRODUCT

AMW, established in 1949 by Sir Cyril de Zoysa, claims to be the second-oldest distributor for the Nissan brand of motor vehicles in the Asian region – the oldest being Siam Motors of Thailand. In an era when European car manufacturers were dominating the local car industry, AMW bade for the Nissan dealership here in 1957, perhaps because it envisioned a future rise in demand for Japanese cars. Today, AMW is reaping the rich dividends of the wise decision made by its founders. The company has gone from strength to strength to record robust growth, which is partly attributed to its Nissan dealership. And AMW has invested significantly to popularise Nissan in Sri Lanka.

Nissan’s brand strength rose sharply after March 1999, when the cash-strapped Japanese carmaker formed an alliance with Renault, a well-established French manufacturer. Nissan’s star was on the decline for eight consecutive years before its alliance with Renault, which was then led by CEO Carlos Ghosn. Soon after the Nissan-Renault alliance, Ghosn took over as Chief Operating Officer of Nissan and is credited with the brand’s successes and exploits thereafter. The alliance, which has been recognised as a rare success story for mergers worldwide, helped both manufacturers to establish themselves jointly as the world’s fifth largest car producer in 2002. General Motors, Ford, Toyota and the VW Group are the four leading car manufacturers today.

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RECENT DEVELOPMENT

The mission of Nissan’s new management, following its alliance with Renault, was to achieve a target identified as Nissan 180, which represents one million additional sales in five years, achieve an 8% operating margin and reduce the company’s debt to zero.
It was able to achieve this target ahead of schedule, by the fiscal year 2001. Subsequently,
a new three-year plan, Nissan Value-up, commenced in April 2005, with the objective of strengthening Nissan’s position as one of the world’s most profitable automobile manufacturers.

Nissan’s market leadership in Sri Lanka is presently under threat due to the limited line-up of models available. After the Nissan Cefiro was introduced in 2004, no other model has been launched in the local market. The relatively lower number of Nissan models in the local market is also restricting the choice of buyers, who are more interested in smaller vehicles due to ever-increasing fuel prices. Apparently Suzuki, another Japanese manufacturer, has gained prominence as the market leader in the small car category. Nissan recently joined Suzuki to develop an entry-level car for the region.

Another drawback is that Nissan does not market heavy vehicles such as lorries, buses and trucks. However, there are many new models being planned for introduction, up to 2010, to strengthen Nissan’s line-up.

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PROMOTION

Nissan has set strict guidelines in terms of promotion for its entire dealer network throughout the world to follow when marketing its brand of vehicles.
In most regions, promotional strategies are set so that they are identical. Advertisements do not differ from market to market. Training and guidelines are provided to sales staff of dealers throughout the world to maintain high standards of service to Nissan customers, irrespective of the country of sale. Agents are not permitted to publish or air advertisements without the approval of the principal.
Advertising campaigns and sales strategies are so aligned in order to build brand qualities and confidence, which have become the focus of Nissan after its alliance with Renault.

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BRAND VALUES

Nissan has learnt over the years that it is more successful at creating vehicles that people truly love, rather than creating vehicles that are merely acceptable to everyone.
With a passion for its products and a commitment to its customers, Nissan’s aim is to create cars that thrill and inspire.
A simple phrase that distinguishes and defines Nissan’s brand personality would be, Bold And Thoughtful. Bold means being original, forward-looking, engaging and challenging. Thoughtful means being authentic, thorough, consistent, sincere and ingenious. Together, these ideas are not contradictory, but work together in a unique manner.
Nissan’s tag line, Shift, reflects how the brand responds to challenges. It means to change direction. It often entails a demanding transformation. To make such a strong change requires both boldness and thoughtfulness. To shift requires insight. It means that Nissan is decisively moving to a new position.

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THINGS YOU DONT KNOW ABOUT Nissan

♥ Nissan led the local market in terms of motor car registrations from mid 2001 to 2005.

♥ The predecessor to the Nissan Motor Company was established in Japan, in 1933.

♥ Nissan began research and development work on rocket engines in 1953, one of which powered Japan’s first satellite into space.

♥ Nissan’s cumulative exports from Japan exceeded one million units annually in 1969.

♥ Cumulative production exceeded ten million units annually in 1972. 

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www.nissan-global.com