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Nissan to build Micra for European market in France instead of Chennai

Company plans to focus more on domestic market with new range of products

BS Reporter  |  Chennai 

Japanese automajor Nissan is planning to manufacture the next generation Micra, meant for the European market, from the France facility instead of Chennai. The development comes on the back drop of company's new strategy to focus more on the domestic market, which would demand more from the existing capacity in its facility near Chennai.

Nissan moved Micra production from its plant in Sunderland, England, to Chennai, India, in 2010 to free up capacity for the Juke subcompact crossover.

Andy Palmer, chief planning officer of Nissan Motor Co, Ltd said "as we see it, the Chennai factory will be full and there wont be any capacity to put the next Micra (meant for European market), because of the growth in the domestic market." The next gen Micra is going to come in end of 2016.

It is planning to fill the gap, which is expected to be created when portion of Micra's production moves out from the Chennai facility, will be replaced by new products.

"Their will be a replacement to the Micra in India to address the Indian market and some of the export markets. I am not going to tell you the naming philosophy of the car, we might change the name but we will have a product on that market".

When the Alliance - Nissan and Renault - decided to invest in India the attractions were domestic market and making the country as export hub, said Palmer. The Alliance had invested around Rs 4,000 crore to set up a manufacturing facility at Oragadam, near Chennai.

While current installed capacity is 4.8 lakh units and in 2013-14 around three lakh cars were manufactured under Nissan and Datsun brands.

The company exported 1.16 lakh units last year, making it as the second largest exporter of cars from India. Of the total exports, Micra constitute around 70 per cent and major market market is Europe. The other export destinations include Australia, Middle East, Africa, South Africa and others.

"Going forward our idea is to grow the sales in the domestic market, reduce the export volume. The company will continue to export, that is clear, but will not be like today. I am expecting that we will grow our market share in India," said Palmer, who noted at present company's market share is around three per cent in the Indian passenger car market.

"We got products coming up and we anticipate that the Chennai plant will be full", said Palmer, who noted in the auto industry if the capacity utilisation is at 80 per cent it is considered as full capacity utilisation

Nissan's "anticipation" comes on the back drop of its plan to introduce a range of new products for the domestic market, including CMFA platform vehicles, which are expected to be ready in 2015; platform to include Renault, Nissan and Datsun models. "More draw from the Chennai factory, will be for the domestic usage," said Palmer.

The Japanese auto major who is bullish about the Indian market, said "tempo of take up in India was not as quick as we anticipated, because company had issues in the distribution model". The issue was addressed after a new distribution company was formed and the result was already seen Palmer, who noted in the first quarter Nissan reported 166 per cent growth in sales in the domestic market, which he claims, no other OEMs have reported such a big growth.

Drivers for the growth are new products, awareness of the brand and increase in dealership network.

Currently the company has 28 dealers and it had set a target to cover 98 per cent of market coverage by 2016, by taking total number of dealers network to 300.

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First Published: Fri, August 01 2014. 18:20 IST