Error parsing XSLT file: \xslt\FacebookOpenGraph.xslt The Renault Revolution
Cookies on Businesscar

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive all cookies on the Business Car website. However, if you would like to, you can change your cookies at any time

BusinessCar magazine website email Awards mobile

The start point for the best source of fleet information

The Renault Revolution

Date: 02 February 2012

French manufacturer Renault has ditched 10 models, revamped its customer offering and moved away from motability and rental in a massive shift in philosophy designed to build a more profitable business. Paul Barker looks into the detail

Renault invited BusinessCar to its UK headquarters for a business briefing just before Christmas.

Rather than the expected 'state of the nation' review of 2011 and preview of 2012, the firm proceeded to surprise the assembled journalists with a massive revamp of its UK operation including axing 10 models, lifting its customer offering and dumping the less profitable business that the manufacturer has been accused of over-dabbling in recently. The revamp is being activated now, to get the company's house in order ahead of a pivotal couple of years, with a new Budget brand and a range of electric vehicles due in the next 18 months (see 'New brands - ZE and Dacia', right).

"This is a fundamental change to the business model in the UK to build a more sustainable future for Renault in the UK," says Darren Payne, Renault UK's fleet and commercial vehicle boss.

The headline move is the decision to drop 10 cars from the line-up. According to Renault, they account for less than 10% of the sales mix and are either "not profitable or don't deliver va va voom for our brand", says Payne. As of 1 February 2012, the Wind roadster, Modus, Grand Modus, Kangoo passenger car, Kangoo Compact van, Laguna hatch, Sport Tourer and Coupe, and the Espace and Grand Espace models will be deleted from the price list, leaving Renault with the Twingo, Clio, Megane and Scenic ranges until new products are launched in 2013. At that point, the five-Seat Scenic will be replaced by a Nissan Qashqai-style crossover model with 4x4 looks. Also on the new product agenda is a smaller Nissan Juke-style crossover model, and the new fourth-generation Clio, which is 12 months away. Meanwhile, the Scenic range is facelifted next spring, just ahead of the Megane receiving a mid-life cosmetic upgrade, which will also see new engines added to its range in the form of a 110hp diesel with figures of up to 80mpg and 93g/km, and a new 1.2 115hp petrol engine.

As of 1 February, Renault will also improve its warranty and service package. The manufacturer's standard warranty on all its cars and vans now set at four years or 100,000 miles, as well as four years free roadside assistance. Local fleet customers - those without end-user terms from Renault - also get four years free servicing, and four-year finance packages if required.

"This isn't a programme, it's a fundamental part of our DNA in the UK," says Payne.

Renault is also moving all its car ranges to a maximum of three trim levels plus the range-topping RenaultSport models in all bar the Scenic, as well as removing entry-level specifications and fitting every car with air conditioning, alloy wheels, Bluetooth and iPod connection as standard.

Profitability

At the same time as these changes, Renault claims it is exiting low-profit channels that have been synonymous with manufacturers dumping cars for volume rather than profit. Payne states that the firm doesn't have any car rental volume at all budgeted for 2012. "It's all on vans, and they are on a longer cycle," he says. "It's good, profitable business for us."

He stopped short of saying Renault wouldn't do any car rental at all, though. "We're not saying we'll withdraw permanently; we are saying we will be in those sectors where we can make money and be profitable."

That also means a large drop in activity in the Motability sector. Renault currently has no volume showing for 2013, and most of the volume it does through the channel this year will be orders taken in the last quarter of 2011. "We absolutely support the programme but we will only be in Motability where we can make a sustained profit," declares Payne. "We will still be in the programme but our initial rentals will be higher to enable us to make a profit."

These moves will lead to a significant drop in Renault's market share over the next coupe of years, particularly in the fleet sector where the focus will now be the 'true fleet' contract hire and leasing companies or outright purchase fleets.

"We're going to focus on core fleet - we've got a core range of cars and two channels: core fleet and retail," says Payne. "It makes us more profitable and is sustainable for us and our dealers." From the fleet perspective, that means developing local business activity as a means of improving profitability. In order to increase appeal to local fleets, Renault is increasing the number of its Pro+ fleet and LCV specialist dealers from 23 to 52 by the end of 2012.

"We are focused on true fleet - it's a strategic change not a short-term thing," concludes Payne. "It's a fundamental change in the way we operate in the UK market. The plan is about making the company profitable."

New brands - ZE and Dacia

One reason Renault has taken the decision to act now on its large-scale revamp of its business is the looming arrival two new developments that it hopes will fuel growth in both sales and the brand's reputation.

The French company is a pioneering firm when it comes to electric vehicles and will have four different models on sale by the end of this year. Fleet and commercial vehicle boss Darren Payne describes the arrival of electric models, under the firm's ZE branding, as having parallels with the "Prius moment" in the UK, when Toyota launched the first hybrid. "The difference is that we have four models at once," he says. "ZE will be Renault's image brand. We want to make the most of the opportunity ZE gives us in the UK to raise the profile of the Renault brand. It will make people think differently about Renault."

The four models are the recently launched Kangoo ZE, BusinessCar sister title What Van?'s 2012 Van of the Year, the lower medium Fluence, supermini Zoe and small car-cum-scooter Twizy. All will be on sale by the end of this year. In particular, the Zoe is seen as the model to increase interest in Renault, with a price expected to be around £13,000 plus monthly battery lease. "The Zoe showcases what Renault is all about," states Payne. "The fleet market will be attracted to the way it looks, and we need to get bums on seats so we will be running roadshows around the UK to get people into our EV products."

At the other end of the scale, Renault is 12 months away from launching its new budget brand into the UK marketplace. Dacia models are now a common sight on roads in mainland Europe - the brand is the fastest-growing in Europe in the past six years - but it finally makes its entrance to the UK in January 2013.

Described as "good cars at shockingly affordable prices with a business model that breaks the rules in the UK", Renault pledges that it isn't setting any targets for Dacia, won't be incentivising sales at all and, most importantly for fleets, won't be giving discounts. "There won't be fleet discounts for customers. We will not be setting a fleet objective - there will be no sales objectives at all," promises Payne. "The price and the use of Renault engines and technology makes the cars attractive from a fleet perspective."

The range launches with the sub-£10,000 small 4x4 Duster model and the supermini Sandero. These will be followed by a Sandero estate coming in summer 2013 at the same time as the Sandero Stepway crossover model.

Dacia models will be sold through the existing Renault dealer network, and Payne says the introduction allows the brand to "cover the lower end of the market, which allows Renault to move to more profitable territory".



Share


Subscribe