AKS NISSAN Akshay Jain
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AKS NISSAN Our story of 8-year relationship with Nissan India Akshay Jain Aditya Wheels India Pvt Ltd. Dear Sir, Firstly, I would thank you for this opportunity More than 7 years we have been in business with NMIPL (LOI in 2010, operations started in 2011) Data for Every Year AKS NISSAN & NISSAN INDIA BUSINESS SALE Sr FY No of Vehicles Sold Value of Vehicles (INR lac) Value of Spares 1 2011-12 271 1563.55 33.80 2 2012-13 122 1001.35 72.70 3 2013-14 122 1087.39 107.02 4 2014-15 263 1879.51 142.28 5 2015-16 196 1214.76 160.00 6 2016-17 251 1117.66 175.25 7 2017-18 240 803.01 163 AKS NISSAN Qtr 1 Qtr 2 Qtr 3 FY17-18 & Jan WHOLESALE RETAIL SSI CSI Month Target Achievement % Target Achievement % April 24 17 71 20 20 100 920 815 May 23 18 78 19 19 100 871 840 June 24 25 104 26 26 100 825 878 July 28 18 64 30 9 30 854 820 Aug 33 14 42 33 8 24 902 744 Sep 27 29 110 30 31 103 829 Oct* 29 29 100 36 36 100 Nov* 31 20 30 11 Dec* 26 19 33 26 Jan* NA 20 20 Feb NA 01 03 March NA 00 31 240 July & Aug – GST implementation, Sep-Oct – News of new dealer appointment, Nov- step motherly treatment starts Jan – Targets stopped being sent, new dealers setup become operational 2016-17 (year preceding) Total Industry Volume – Raipur 15809 These are some of the figures I would like to highlight before I go briefly into my story. Profit/loss in operation LOSSES OF OPERATION 0 -5000000 -10000000 -15000000 -20000000 F.Y. 10-11 F.Y. 11-12 F.Y. 12-13 F.Y. 13-14 F.Y.14-15 F.Y. 15-16 F.Y. 16-17 F.Y. 17-18 Series1 -748632 -1123578 -13620332 -12898699 -17419277 -10045181 -12633212 -9283950 I would like to clearly attribute these losses to Nissan & their false promises of increasing market share every year. 1. We were issued a letter of intent dated 24.06.2010 through our representation on 24.04.2010 signed by Mr Kiminobu TOKUYAMA, MD & CEO, NMIPL and appointed as the ‘Authorized Dealer’ of the your good selves for NIMPL Passenger Cars in Raipur for the first time in the year 2010 wherein Hover Automotive India (HAI) Pvt Ltd was your exclusive service partner in the field of marketing, sales, after sales & dealer development and an agreement to that effect was also entered into by and between the parties. An Interim setup/city display was put up in Raipur on GE Road opposite Anupam Garden, Raipur while the existing facility at Raipur-Bhilai Expressway, Kumhari was being made. This existing facility was taken up after much deliberation as it satisfied Nissan’s premium image and satisfied the Nissan size and scale required cleared on 26 Oct 2010 by the Turner & Townsend, Nissan Motor Co. Japan’s designated design house for SE Asia under the Retail Visual Identity (RVI) Program for preparation of a grand assault on the Indian market in our Primary Market Area. A total investment of close to Rs. 6.5 crore Particulars (group summary) Cost Description Showroom & W/k shop 4,21,57,021 Workshop area apprx. 20000 building civil & other sq.ft. Showroom including back office 15000 sq.ft. Signages 24,48,707 Workshop equipment & 87,53,706 tools Office Equipment 3,29,807 Furniture 15,34,139 Computers & IT 9,93,450 Air conditioning 21,30,577 Demo Cars 83,21,540 6,66,68,947 Initially 39 dealer locations were established by you and your service representative across India & efforts were put to increase footprint to 55 by 2012. NMIPL’s products included NMIPL product segment india launch date Price range ex s/w Xtrail (2nd generation) D+ Oct 2009 25-26 lakh Teana D+ Sep 2009 22-26 lakh 370 z Sports Jan 2010 53-55 lakh Hatchback Micra Compact July 2010 5-6 lakh Sedan Sunny Sedan Sep 2011 5-8 lakh Kiminobu Tokuyama, Managing Director and CEO, NMIPL said, “We have come to India to become a major player and Chennai will play an important and strategic role in our Indian operations as we gear up for the start of production of our locally made Global Compact Car (Micra) in May 2010.” Dinesh Jain, CEO, Hover Automotive India (HAI), on 10 Dec 2010 said, “We have had an overwhelming response to the Micra, and at present we have bookings for about 8,000 cars.” He added that Nissan plans to sell nine kinds of vehicles by 2012 in India. Another important and pertinent fact, Renault India Pvt Ltd (RIPL) also entered Indian market in May 2011, one and a half years after NMIPL (Indian subsidiary of Nissan Motor Company of Japan) and started distribution of Renault branded products, manufactured in the same plant as Nissan branded product wherein the manufacturer, Renault Nissan India Automotive Pvt Ltd (RNAIPL) was a joint sharing of Renault SA France & Nissan Motor Company, Japan. This material fact along with possible sharing and rebadging of Nissan cars were hidden and suppressed from us and NMIPL’s esteemed various other dealers. To our shock and dismay, Renault India Pvt Ltd (RIPL) launched a Renault Product called Pulse1, which was a blatant copy of the product mentioned in the dealership agreement, the Micra in Jan 2012 at the biennial event of Indian Auto Industry’s biggest show the Auto expo. In the financial year 2011-2012, AKS sold 271 Nissan products & all the good gains made to break even till Jan of 2012 due to the announcement & showcasing of this rebadged product, went reverse and the financials ended up in the red at nearly INR -11 lakh loss, which was on a positive track before such an announcement. Protests from us and various other dealers were pursued but to deaf years. Had we, known these suppressed facts maybe would have never gotten in business with NMIPL for Nissan products. It is also imperative to mention here that RIPL dealerships investment to the ratio of NMIPL dealership investment was a fraction, somewhere around the 25% mark. Lesser & dwarfish dealership setups for RIPL meant & seemed as if Renault SA France was using its dominant position with 43.4% voting share ownership of Nissan Motor Co. Japan., while Nissan Motor Co. Japan that holds a 15 percent (non-voting) stake in Renault SA France had no say. On the global alliance webpage of Renault SA France and Nissan Motor Co. Japan following is mentioned, “The Alliance is a strategic partnership based on the rationale that, due to substantial cross- shareholding investments, each company acts in the financial interest of the other—while maintaining individual brand identities and independent corporate cultures.” “The goal of the Alliance is to increase economies of scale for both Renault and Nissan without forcing one company's identity to be consumed by the other's”. 2. The dealership contract was renewed again on 18.07.2012. It is imperative to mention here that further renewals are a set norm in this business as heavy capital investment, goodwill & various other damages 1 Renault Pulse & Nissan Micra side by side are at stake from the dealer’s point of view unless the dealer breaches terms of the contract. As with any sales business, customer perception is the key & therefore because of lack of demand of Micra as it availability as a rebadged car, Pulse from RIPL, swayed market forces and sentiments. The breakeven volumes predicted in the business plan weren’t being reached due to no fault of ours. This rebadging exercise has probably never been done in the history of automobile sales in the same market or geographic location. This whole rebadged car exercise was contrary to the statement of the alliance. Yet another NMIPL product, Sunny was rebadged and renamed Scala2 for RIPL dealerships and launched on Aug 2012. The popular dark humour joke between the NMIPL dealers about was spot the difference! In Sep 2012, NMIPL’s product Evalia was launched which was the 6th product of the promised 9 products from NMIPL & its exclusive service partner HAI till 2012. Nissan Motor India Pvt Ltd also spoke to the media expand its number of dealers to 300 by FY16. 3. As per a letter on 14.09.2012 signed by director Hideo NIWA, NMIPL Hover Automotive India (HAI) would assume Sole distributorship & will be a single window for all dealer related transactions including assignment & transfer of contractual rights arising from Nissan dealer agreement, wherein the agreement signed on 18.07.2012 would be would be under clause 32(b) w.e.f. 1st Oct 2012 would substitute Nissan Motor India Private Limited or NMIPL to Hover Automotive India Pvt Ltd or HAI. The said letter stated as follows, “We (NMIPL) look forward your similar, continued support and initiative in developing the sales, service and building the brand image of Nissan in territory allocated to you, in the future too.” FY 12-13 would prove to be the start of bleeding years with NMIPL on assured promises of Future Products & stoppage of rebadging from the next product. Sales has plummeted to 122 from 271 a sharp fall of 55%. For no fault of the ours, losses rack up to as high as -1.36cr INR in FY 12-13 in this exclusive NMIPL dealership business. The new product, Evalia, launched in Sep 2012 also wasn’t accepted by the market.