Renault is one of the Europe largest car manufacturer. Holding a 44.3% stake in Nissan, it became the fourth largest automobile company of the world behind General Motors, Ford and Toyota.
70% of its sales volumes come from western Europe and 30% from its expansion outside (Asia, Russia...)
Renault uses two different kinds ofstrategies to improve itself on car markets (according to the country’s culture).
Renault in Europe
French car maker Renault sees its net profit slumps because of a thin margin and high costs. There are more precisely four reasons from which results this decrease on net profit :
❖ A decrease on vehicules sales (4 %)
❖ An increase on raw materialcosts
❖ Higher oil prices
❖ Exchange rate movements
❖ An increase on manufacturing costs
❖ European pollution norms too costly
Renault has charted a four year program called Commitment 2009 with 3 key objectives to become the most profitable European volume car company.
❖ The first commitment is the « quality ». Renault will change its image in order to bequalified as a brand of quality. The laguna will be in the top three in terms of product and service quality.
Actualy, the company made progress with a decrease of 40% in the 12-month incident rate and of 30% in costs.
And to improve its image of quality, after-sales services are an obligation. Nowadays renault makes advertisments about its garages « : who knows more your renaultthan renault ? ».
❖ The second commitment is about profitability, aiming an operating margin of 6%. This objective would be reached thanks to a costs reduction, an improved profitability of international operations and a strong result in the european market.
❖ The fird commitment is to increase the sales volume by 800 000 cars, including european and outside markets. Logan will beone of the most successful sale for renault especially in Russia and Asia.
26 new models will be rolled out to replace the existing vehicules including heighteen in europe, and the new Laguna will be the spearhead of this range. Eleven will be expansion models whereas thirteen will be remplacement models.
A successful strategy ?
Renault’s production is too expensive and its salesdecrease. To remedy of this situation, Renault can delocalisate, so as to reduce manufacturing costs, or to boost its sales.
They are decreasing because the european car market reaches saturation point. Indeed, everybody is equiped with a car. People who are not often opt for public transports.
Therefore the objective is to renew each car which is on the market whishing people willwant to replace theirs.
However it is a real chalenge. To buy a car means to invest and it is a long term investment which needs to pay for itself. It is a purchase which asks reflexion and takes time.
Only fashion people often change their car. They want THE car with the higher technological level.
Which means, Renault has to issue the best car and thus to invest a lot on researchand development.
Besides, this target represents a small part of the european population and can not boost sales. To capture market’s shares, Renault needs to change consumers’ mentality and to become the reference in terms of quality as a car maker.
Concerning costumers’ mentality, Renault must create a new need. No longer a car can be an investment which asks a depreciation on 10years, but a short term investment (around 3 years). This requires a time of adaptation. Nobody will begin to buy a new car every 3 years.
That’s why some process exist :
❖ Renault offers a discount at the purchase if the costumer leaves his old car.
❖ The most interesting process is the « leasing ». people lease a car during a determinated periode and replace it at the end...