It’s a radical plan with far-reaching consequences that will be watched by rivals with interest; make no mistake, Renault is not the only car company struggling to make profits in the UK at the moment. With the economic situation changing by the hour in the Eurozone, they may not be the only ones taking drastic action, either.
However, as managing director Thierry Sybord outlined today, it is something that needed to be done. “When you have a system in place that doesn’t make profits, you have to change it,” he said. “We couldn’t continue how we were, and this gives us a chance to regroup and reapproach our strategy.”
Central to that is planning for 2013, when the new Clio will be on sale, budget brand Dacia will be launched in the UK and a wider compliment of electric vehicles, marketed under the ZE umbrella, will all be ready for sale. Restructure in 2012, be ready for 2013, so the thinking goes.
Pessimists will inevitable worry that the strategy puts too much pressure on the next generation Clio to perform well, but Sybord sees no reason to panic. “It’s a car we have a history of selling well, so we have high expectations.” That’s despite a parallel vow to end Renault’s recent history of selling cars at big discounts (Motability and rental sales will be slashed under the new plan).
The launch of Dacia adds another degree of momentum to the company. The Dacia Duster will be sold from less than £10,000, while the Dacia Sandero will start from less than £7000. These value propositions (with no haggled discounts) will be sold in all Renault dealers, and will be very much of their time. Rather than cannibalise Renault sales, Sybord suggests history has shown Dacia customers tend to come from other brands, or would otherwise be contemplating a secondhand car.
The electric cars are there to add a halo to the Renault brand, in the manner Prius does for Toyota, says Sybord. All surviving Renault dealers will sell and service vehicles such as the Twizy, Fluence and Zoe, and they will all be profitable for the group, even if sales expectations are modest (and a closely guarded secret).
Once the shock of today’s announcement subsides, Renault UK can at least look forward to a future with a clearly mapped out mid-term plan. Until now, it seemed to be limping along, discounting heavily to meet volume sales targets with little care for protecting the used values of its cars or its customers’ interests. As of today, it has a plan of attack and a purpose. Whether it will work remains to be seen, but at least someone has grasped the opportunity for change rather than plodded on towards an uncertain conclusion.