Talk about market strategy to most
senior executives in this industry, and nearly all – irrespective
of what carmaker they represent – will either hark on about the
Japanese conquering the US market or the rat race to become top dog in
China.
Georges Douin: one of the architects of Renault's global strategy |
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The average automotive big chief will not get excited at the prospect
of talking about Romania, Iran and Korea over a cup of coffee behind the
scenes of a major car show. But then Georges Douin is not your average
big chief and Renault is not your typical carmaker.
Try this for size: The US and China are off the menu for the French OEM.
Instead it continues to devour local delicacies in such far off regions
as Columbia, Mexico and Korea, (not forgetting closer-to-home Romania
and Slovenia). Even Iran is on the horizon for Renault, after last month
CEO Louis Schweitzer confirmed the carmaker was looking to establish a
footprint in the country.
As a result, Renault’s global strategy has been held in high regard.
Analysts pointed to Renault’s model of taking advantage of niche
and untapped markets as proof that to be a big player in the industry
one need’s not have the US market as a top priority.
But a year is a long time in the automotive world. In the past 12 months
Renault Group worldwide sales performance has lagged in three-key areas:
In France, sales were down by nearly 55,000 units from 2002 to 2003. In
Renault’s key market – West Europe – sales dropped by
63,900, while overall worldwide consolidated sales shrunk from 2.4 million
in 2002 to 2.38 million a year later. Only in the ‘rest of the world’
markets – namely Korea – did Renault report a rise.
Such statistics have led some to question Renault’s busy strategy
in aligning itself to the likes of Dacia and Samsung. It has also bred
much talk that the French carmaker now has one eye on the US market.
| “Louis Schweitzer talks about this subject very often and
maybe it will happen when Renault has succeeded in other countries,”
explains Douin. “It could happen when we have achieved full
awareness of the brand and when Nissan is completely out of additional
products and is considering that their range of products can not gain
more market share,” he says. |
Yet Renault must tread with caution if it is to submit to the allure
of American consumers. “We have to be very careful about this issue
because French products are not recognised in the US and also passenger
cars make-up less than 50 per cent of the market,” says Douin.
“So if we go there we must, absolutely, bring something to US customers.
We must bring the brand and strong concepts without any failures. It’s
very, very difficult and I don’t see at this point in time how Renault
could justify entering the US market. But after 2010, why not? We must
have very good gasoline engines and competitive manual and automatic gearboxes.”
Taking a risk is something that Renault chiefs do not shy away from. The
French carmaker has been brave with the Dacia project, bold with Samsung
and very daring in its design ethos, especially with the all-important
new Megane. But speaking to Douin, one gets the impression that the US
remains a gamble too far, even if worldwide sales are down.
He continues: “Where Renault it strong is the C-segment, so we have
no SUV lines. If American people finally come to accept reasonable fuel
economy figures with 2.0 litre four-cylinder engines in cars like the
Megane, then we can think to go there. But what is important is that we
should not deviate away from the main features of our European programme
to try and fit in the US.”
Rather than moulding operations for the US market, Renault, it would seem,
is hoping for a culture change in the American consumer that fits into
its European programme. The French carmaker could be in for a long wait,
and Douin knows it.
| “Americans will not accept 2.0 litre economical engines, I
don’t see it. It will not happen in the next five-years. The
first step could be that they maybe will accept diesel engines in
their SUV’s. Then, at that stage, they’ll realise how
good the diesel engine can be, but it’s amazes me how they like
big SUV’s with V8’s and V10’s.” |
More realistic for Renault is the Chinese market. Fellow countrymen
PSA, like many other leading European carmakers, already have strong operations
in the communist led country. Yet Renault – a brand that prides
itself in tapping into untapped markets – has still yet to establish
a presence, something that Douin says it is trying to readdress.
“It’s no secret we’re looking at a Renault joint-venture
with Nissan’s partner, Dongfeng. These two have reached a very important
agreement for big truck and passenger car projects and so we’re
examining how we can join this in a separate joint-venture, but joining
all possible synergies, so same location, purchasing, engines and technologies.”
Douin continues: “Thanks to our company policy, I think we can do
this quite quickly, but we shall have our own brand with our own products.”
The US market might at best a decade away and China beckons in the next
three-years, but for Renault’s other two brands – Dacia and
Samsung – the next 18 months will play a key role in shaping their
future.
Dacia, says Douin, is still on schedule for an autumn launch of a new
class of cheap family car that will be built in Romania but will also
be supplied to other markets from manufacturing bases in Columbia, Iran
and Russia.
Codenamed the X90, the Megane sized car is seen by many as a breakthrough
model in achieving what many thought was the unachievable: a full-size
five-door vehicle for only €5,000 ($6,100).
Like Dacia, Samsung is preparing to launch the next generation SM5 early
next year, a model that Douin hopes will boost the carmaker’s market
share.
| “Samsung is quite successful, the only trouble is that the
market is down by 20 per cent, and so this means our sales are down
as well,” says Douin. |
“In 2003 we reached 11,000 units in sales and in terms of market
share the SM5 holds about 23 per cent, so it’s doing well. The SM3
has stronger competitors, so it’s doing less well, but it still
holds around 15 per cent.
“The next step is the replacement of the SM5, which will appear
by the end of this year, and for me it will be a main asset for us over
there. It is on time and I’m very happy with the product and it
should bring us additional market share.”
The Samsung SM5, which currently holds 23 per cent of market share in South Korea, will be replaced by a new model later this year |
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Chasing additional market share is vital for Renault. Last year might
have seen a dip in sales, but the black sheep of the big players will
have the last laugh and will not follow the rest of the herd as it consolidates
its already healthy position.
Last year was a blip and Douin has convinced me. For Renault, Iran and
China beckons while the US remains a possibility. Dacia is about to launch
a significant product offensive and Samsung is pushing out the SM5. Renault
group sales will be back on the up, I’m sure of it, after all, he
who dares wins, and Renault dares to be different a lot of the time.
Designing to be different:
Renault’s courageous market strategy – turning it’s
back on the US and taking it’s time on deciding a programme for
China while also venturing into markets other carmakers dare not go – has, in-turn, been matched by its bold design ethos.
In style alone, Renault plays an important role in today’s industry,
and Douin – an engineer at heart – admits design is paramount
for the French carmaker.
“We are clearly not engineering driven,” he says without second
thought. “We know that the most important thing is design, it has
always been like this. Of course, engineering quality and safety is important,
but if the design is not there you can’t sell the car.
| “The two main drivers in sales are design and cost. People
select to buy one model over another on these two bases.” |
Renault’s strategy, says Douin, has always been to be different
in design and it will continue not to follow the herd in terms of styling.
“From the past and up to today, Renault has pushed the design boundaries,
this goes as far back to the R16, which was radically different at the
time. It has always been the willingness of this company. According to
the product, and the position of the product and the competition, it’s
clear, I think, that Renault has an awareness of design,” he says.
Yet lessons have been learnt from the Avantime project. “The Avantime
is a complicated story and a sad one as well. I could speak hours about
this, but I think there were too many reasons to do the product, but none
of the reasons were robust and reliable enough.
“If this car had not been so important for the survival of Matra,
I really think it could have lasted, and it could have brought great satisfaction
to some customers. It was a good product, but on the other hand –
and as an engineer – clearly the quality aspect on the global chassis
was a little below than what it should have been.”
The controversial Avantime which Douin says could have lasted longer if it was not so important to the survival of Matra |
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Douin adds: “But the design was a good asset of the Avantime and
it’s become a collector’s car. For Renault we would have been
happy with 30 Avantime’s a day, but Matra expected more, something
like 80 units, and clearly there were not 80 customers interested in such
a niche product and so they decided to stop it and we were obliged to
accept as this was their investment.”
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