The termination of the pact comes ahead of Datsun Go launch
Even as Japanese auto major Nissan unilaterally ended its exclusive sales, marketing and distribution tie-up with Hover Automotive India, the latter has threatened to pursue “the necessary course of action to protect the interest of its employees and stakeholders”.
Nissan’s termination of the pact with Hover comes ahead of its sub-Rs.4 lakh Datsun Go launch, slated for next month.
Ending the alliance with Hover, Nissan said henceforth it would sell its cars on its own in India.
Hover hit back questioning the conduct of Nissan in terminating the pact.
“It is premature to talk about termination and we are hopeful of an amicable resolution,” said a statement from Hover.
Sounding conciliatory, Hover said “it is premature to say any agreement regarding termination has occurred.” Nevertheless, it asserted that “Nissan does not have any legal basis for the termination of services of its national sales company — Hover Automotive India Pvt Ltd — in India.’’ Taking exception to the termination announcement by Nissan, the Hover release said, “HAI understands that Nissan wants to move quickly but it is possible only with the cooperation and consent of HAI.”
Earlier Nissan Motor India Private Ltd said it had assumed full responsibility for the sales, marketing and distribution of all Nissan-branded vehicles and parts in India with immediate effect.
It did not give any reason for the termination.
Sources said none-too-encouraging sales and service deficiency, among others, strained the relationship between Nissan and Hover.
If sources are to be believed, Nissan tried hard to have an amicable end to the alliance.
“Hover wasn’t willing for that,’’ a top source said while unwilling to be quoted. This stand-off ultimately resulted in the termination of the tie-up, the source added.
Nissan was probably the first passenger vehicle (PV) manufacturer to establish an outsourced model for selling cars in India amid a lot of apprehensions among industry experts over the structure. It’s domestic car sales have been below expectations and it hasn’t been able to build a strong brand.
Nissan’s hatchback failed to attract buyers in big numbers in India, and the mid-size sedan that came after that couldn’t sustain the momentum. Partner Renault, meanwhile, could create some excitement with its cars and increase sales with conventional distribution model.
During first 10 months of this fiscal, Nissan sold 29,303 units. In 2012-13, Nissan’s domestic PV volume stood at 36,955 units (33,261 units in 2011-12). Renault sold 52,463 units (3,666 units in 2011-12).
In recent months, Nissan was indicating that its Datsun cars would be marketed by a separate network and not through Hover.
Auto industry experts pointed out that poor sales could be the main factor for terminating the agreement. “The outsourced model followed by Nissan is something new that has been conceptualized in the Indian context. And, it poses its own set of challenges as it brings an additional operating layer between the OEM and the dealers,” said an auto analyst.
With Hover out of the layer, Nissan would now have direct interface with dealers. Sources said Nissan could now ink independent contracts with dealers.