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Nissan Resurrects Datsun

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Nissan Motor Co. (NSANY - Free Report) re-launched the Datsun brand of cars in the emerging markets that hit the American showrooms more than 50 years ago and vanished in 1981 for the sake of its namesake brand.

The latest version will be known as Datsun GO, the same name used by Nissan when it was launched for the first time in Japan in 1914. The new Datsun GO will be first launched in India early 2014 with a price tag of 400,000 rupees (roughly $6,650), and later in Indonesia, Russia, and South Africa within two years.

The new Datsun will be a five-seat hatchback, powered by a 1.2-liter, 3-cylinder engine, paired with a 5-speed manual transmission. It will be the third brand of Nissan accompanying its namesake and Infiniti brands.

Nissan relies heavily on the brand to ignite interest of new car buyers as it did in the U.S. many decades back. As a result, the automaker is building the model by specifically tailoring it for each market. However, the concept of the model will be based on common inspiration.  

The styling of the Nissan’s Indian version of Datsun has been done at its Global design center in Japan. However, the responsibility of R&D and engineering development of the model has been given to its Indian counterpart to ensure that the model could meet local market conditions, tastes and preferences. It will be produced at Renault-Nissan alliance plant in Oragadam, Chennai.

Despite all these efforts, the success of Datsun in India is a moot issue. This is because the automotive industry in India is facing weak market conditions now. According to the Society of Indian Automobile Manufacturers, sales of passenger cars dipped 10% year-over-year in the second quarter of the year. Higher interest rates and soaring fuel prices are the main reasons for this decline.

Nissan also faces strong competition from Toyota Motor Corp. (TM - Free Report) , Ford Motor Co. (F - Free Report) and Volkswagen AG (VLKAY - Free Report) , whose compacts and minicar lineups accounted for about 75% of passenger-car deliveries in India in 2012. Further, Nissan’s cheapest car in India is the new Micra compact hatchback, which costs about $5,800, but it is still more expensive than Maruti Suzuki Alto 800 and Hyundai Motor’s Eon.

NSANY posted a 12.9% increase in sales to 92,237 units -- it’s best-ever June sales in the U.S. The improvement was driven by double-digit gains in Altima and Sentra sedans and fourfold increase in LEAF sales to 2,225 units after a price reduction of more than $6,000 at the beginning of the year. In the first half of the year, Nissan LEAF sales more than tripled to 9,839 units.

Currently, shares of NSANY retain a Zacks Rank #1, which implies a short-term (one to three months) Strong Buy rating.

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