Renault’s budget brand won’t trade its no-discounts principals for UK market success

Renault may be gearing up for the UK market launch of Dacia, but as senior company officials have warned this week, a permanent place for the Romanian budget brand in our showrooms is far from certain.

At the international press launch of the new Sandero and Sandero Stepway, in response to questions about the robustness of the firm’s strict 'no discounts' policy on sales, Renault UK and Dacia representatives launched an impassioned defence of a philosophy by which models will be marketed and sold at low list prices - but absolutely no lower.

It’s a strategy that runs contrary to the way that many volume-brand cars are sold in Britain – through either dealer- or manufacturer-funded list price offers. "It’s a key part of the Dacia brand: transparent value-for-money," said Renault UK managing director Thierry Sybord. "And we won’t kill the brand for Britain. I believe that buyers in the UK will respond to the simplicity of buying a Dacia — but if I’m wrong, we will just pull out."

Renault’s plan for the UK rollout of Dacia is a tentative one, made possible by the global success of Dacia, and the lack of pressure to push cars into the market. Every Renault dealer in the country has bought into the Dacia franchise, and will represent the brand either by a specially branded ‘Dacia Corner’ in their showrooms or with external ‘Dacia Boxes’ on the forecourt. 

But cars will not be kept in stock in the UK — every one will be the product of an individual customer order, with lead times of between three- and six months expected. For that reason, and because Dacia orders will not count towards dealer sales bonuses, the kind of deals sometimes seen with other brands – often struck to deliver volume-related sales rewards or to manage supply – won’t be necessary.

It isn’t for Renault to rule outright on how dealers should sell Dacias, and a spokesperson did admit that, with more richly equipped cars, those dealers will have a little bargaining room. But the same source confirmed that dealer margin on entry-level Access models is very low – a deliberate tactic to motivate them to ‘up-sell’. There are also special sales rewards for cars sold with extended five- and seven-year warranties.

Renault UK is aiming to secure one per cent of the UK new car market with its Dacia brand in 2013 – an ambition that will amount to selling just short of 20,000 cars, through a dealer network that will expand to just under 150 showrooms this month. There are already 1700 confirmed orders for the Duster compact SUV, which will be made in right-hand-drive form at Renault-Nissan’s Chennai plant, in India. Right-hand drive Sanderos and Sandero Stepways will be built in Pitesti, Romania.

Our Verdict

Dacia Duster

The Dacia Duster is a no-nonsense machine that wears its bargain price tag like a badge of honour. And we can’t help liking it for that.

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Comments
15

5 December 2012

Personally, I think this is the way selling a car should be.  A price, that has been set at a reasonable level that is what everyone will pay.  Full stop.

The dealers earn a fixed cost and earn more if they sell extras such as warranty.  They will have to work for their money and this should have the pay off of decent service.

Good luck to Dacia.

 

 

It's all about the twisties........

5 December 2012

I am expecting my Duster Access 2wd in March.

Plain wheels and no stereo suit me fine. Already chosen a nice aftermarket DAB unit, so much better than standard fit units at this end of the market.

A plastic boot liner is the only extra I want

 

5 December 2012

Margins on the Duster and Sandero are tiny, if a dealer sells an Access Sandero, for example they will break even after all associated costs are taken into account.

There are no targets set for the Dacia range so you sell what you can sell, a dealer wont get penalised for not hitting a target as there isn't one and nor will they count towards Renault targets, many of the discounting comes about as dealers are desperate to hit targets, so in this respect there is no actual need to discount the car.

5 December 2012

Sounds like a very good philosophy and I hope they succeed. If they stick to this plan, residuals should be just fine. 

It would be good to know if the competitive purchase prices are matched by reasonably affordable insurance and servicing / repair costs. 

5 December 2012

I think most people trade in their old car. So whilst the price of a new car may be fixed the dealer can still make a deal more or less good value by what they offer as a trade in.

As anyone who has traded in a car will know the price offered by different dealers often differs hugely. If the dealers are being incentivised to sell the extended warrenty, and will also be paid for finance etc the one customer the wont want is the cash buyer who is happy with the standard warrent, and has no trade in.

5 December 2012

artill wrote:

I think most people trade in their old car. So whilst the price of a new car may be fixed the dealer can still make a deal more or less good value by what they offer as a trade in.

As anyone who has traded in a car will know the price offered by different dealers often differs hugely. If the dealers are being incentivised to sell the extended warrenty, and will also be paid for finance etc the one customer the wont want is the cash buyer who is happy with the standard warrent, and has no trade in.

The problem with this is many new cars have massive margins in them and many get offered, sometimes, thousands more for their car than it's worth as the dealer is using margin and offers from the new car to over inflate the part ex price, you wont be able to do this with Dacia you can only offer what the trade in is worth.

I know there is the "cost to change" however many people only look at the value offered on their pride and joy.

Dealers aren't being incentivised to upsell the warranty, I don't know where Autocar got that snippet of info from.

5 December 2012

You would have thought that Company Car taxation would mean that all cars would now be sold this way.

Like most people I hate haggling and always feel turned over when I buy a car from the trade.  It would be nice to know that I was getting the same price as everyone else.

What a stupid idea to have a list price that nobody (except my father-in-law) pays.

5 December 2012

The Uk Market is tough & buyers are not stupid. How long before incentives are used by Dacia to maintain sales. If they want no quible pricing, give better value further up the range to secure steady sales. Why not make ESP & Metallic paint standard across the range. Why charge £4500 extra for a diesel 4x4 over a petrol 4x2. If they truly offer value make it a £2500 premium. Then there would be no need for pre orders. We all like a bargain, but the Koreans make better, Safer, more reliable cars. What would you put your family in?

5 December 2012

nellimus2 wrote:

The Uk Market is tough & buyers are not stupid. How long before incentives are used by Dacia to maintain sales. If they want no quible pricing, give better value further up the range to secure steady sales. Why not make ESP & Metallic paint standard across the range. Why charge £4500 extra for a diesel 4x4 over a petrol 4x2. If they truly offer value make it a £2500 premium. Then there would be no need for pre orders. We all like a bargain, but the Koreans make better, Safer, more reliable cars. What would you put your family in?

I have to say I disagree with your comments here. First, the 2wd petrol is a significantly lower spec than the 4wd Diesel used as your examples. Then there is the kudos of having a 'European' product backed by a long established brand (one of the oldest in the world). Their expertise in value engineering cars (remember the original Twingo and Kangoo, not to mention 4CV, 4TL and Dauphin) has meant that they offer a significantly higher spec product for the money. Yes it might not pass a EuroNCAP test in the same way as the latest Clio but it is still based on the previous model. Renault have for years sold 'Campus' versions of previous incarnations of Clios to great sales success. Lets not forget that Renault were the first manufacturer to have all of their models rated at 5 stars. I still really doubt the engineering and structural integrity of Korean cars, the doors still feel flimsy and metal feels a little thin in places. Then there is the driving experience, and I have to say, many Kias and Hyundais and Daewoos still have the characteristics of a fridge. I know I would prefer a sandero over an i10 anyday. 

5 December 2012

You seem to be missing the point, the Dacia  platforms are old technology, hence the cheap prices, no one is under the illusion that they will get a better than average NCAP score, but higher up the range, the price advantage significantly reduces. Hence my suggestion of including metallic paint & ESP as standard across the Dacia range, as they cost very little in the manufacturing process & add value that customers would appreciate. Dacia have started its marketing campaign based on exceptional prices for the base models only. If it wants to sell on a take it or leave basis, then Value is essential. The Entry level Duster Diesel 4x4 model is not worth £4500 more than the base model, the manufacturing cost difference would be less than £1500, so where is the value?

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