Exclusive: Australia a key market for Renault
BY TIM NICHOLSON | 30th Jun 2015
Renault has big plans for global growth and the company has cited the Asia-Pacific region as central to its strategy for increasing turnover by 25 per cent within the next two years.
While a belated debut in the Chinese market later this year will spur growth in the region, Australia also has a key part to play.
In an exclusive interview with GoAuto last week, Renault senior vice-president for the Asia-Pacific region Gilles Normand said that while Asia-Pacific makes up about 45 per cent of global automotive sales, it accounted for just 4.5 per cent of Renault’s 2.7 million global sales in 2014.
“There is a significant mismatch,” he said. “We want to grow as a group. We want to grow our turnover. A big chance of this turnover growth needs to happen in this part of the world.” Mr Normand said Renault’s Asia-Pacific market share is 0.4 per cent whereas globally it was closer to three per cent. Take the US and China out of the equation, where the brand does not currently have a presence, and Renault’s global share was more like six per cent, he said.
Turning to Australia, Mr Normand said he was impressed with the company’s recent sales growth, and highlighted Renault’s strong light-commercial vehicle presence and the relatively high take-up of its Renault Sport performance line-up.
“We want to grow at a reasonable pace here, solidifying the presence. We have a couple of strong footholds in terms of product. It is fair to say we have a reasonably good presence in LCV segment … (as well as) some B-segment car like Clio and C-segment car like Megane,” he said.
“We are very thrilled because Australia is on the podium of the countries globally for the Renault Sport series. It was very pleasant, there are many many RS cars – Megane or Clio – on the street in Melbourne so I can see that it is not fantasy number, I can see it is appreciated.” Renault’s sales in Australia have fluctuated since it returned to the Australian market in 2001, building slowly with just a few thousand units per annum for the first decade before hitting its straps in recent years. From less than 2000 new registrations in 2010, the brand climbed to 3600 a year later, 5000 the next and beyond 7000 in 2013.
Last year it passed 10,000 units, and to the end of May this year it had shifted almost 4300 vehicles – up 28 per cent on the same period in 2014.
Strong light-commercial sales have boosted its numbers in recent years, while continued interest in the Koleos SUV, the broadening of the Clio range and a positive response to its new Captur crossover have also had an impact.
Its market share in Australia is sitting at 0.9 per cent this year – more than the 0.4 per cent of the region – but Mr Normand said top management in France was pushing from more growth in Australia, as well as in Korea and from its Chinese debut.
“We are far from being today in line with the market potential. Top management is putting ultimate pressure on us to say that we need to grow this 4.5 per cent, deriving from the region to much more significant business,” he said.
“Once we have our operation in China, once we review the operation in Korea, and expanding a little bit in Australia. As you know the market this year it is more or less flat, the team want to expand between 10 and 20 per cent so we think there is potential to grow more than the market.” Mr Normand said despite the rapid increase in Australian sales, he is aware that achieving further growth could prove challenging, but added that large fleet deals, such as the one the company has with Australia Post, will help boost consumer confidence in the brand.
“It is still a challenging mindset, we are still not even at one per cent market share so we remain very humble, but we think that we can grow and the team has been demonstrating that if we put the right products at the right price with the right dealer network, we are credible,” he said.
“For instance, in LCV we had a very interesting (deal) with Australia Post. This type of thing is what I call a qualifier. Let’s see how it does go. If it does go well, then it’s kind of a qualifier and people will start to have more confidence in the brand, in the product.” Mr Normand said Renault’s plan is to “grow progressively” in Australia, rather than growing “in a reckless way”.
In terms of market coverage Down Under, Mr Normand said there are three “actions” Renault wants to undertake to expand its dealer presence and sales volume.
“Very pragmatically today we are competing in about 60 per cent of the segments of the Australian market, and our geographical range is about 60 per cent of the territory. If you make 60 by 60 it means we are competing in 36 per cent in the mix of segments on national coverage,” he said.
“Where we are, we think there is still room to improve – either the segment share or the local share of the dealers in the point where we are operating. That is action number one.
“Action number two is obviously to keep on expanding the dealer network to increase the coverage. Today we have about 48 dealers, before the end of the year it will be above 50. Progressively we will be getting new partners.” Mr Normand said action number three is to identify segments of future growth that the car-maker could potentially enter.
When asked about the disparity between Renault’s large line-up in Europe and its much smaller product offering in Australia, Mr Normand said: “They can’t have the same line-up as in Australia it is not cost-efficient. Dealerships are different and market presence is different.” Mr Normand said while the LCV market would remain “relatively stable” going forward, traditional passenger cars such as sedans and hatches will “start reducing slightly”, but SUVs will continue to grow, which provides an opportunity for Renault Australia to expand its line-up.
“We have in the Renault line-up, currently, significant investments are being made to deploy a full line of SUV and then it is back to the Australian team working together with us to say, which one do they want to pick up.” Renault Australia managing director Justin Hocevar said earlier this year that the car-maker would focus on its existing SUV line-up – including the baby Captur and the mid-size Koleos in current- and next-generation guise – rather than adding complexity to its stable by introducing the new Kadjar.
Mr Normand said that because the Kadjar would be sourced from Spain, this could cause problems for Renault when it comes to pricing the car here, given what he referred to as Australia’s “cash-conscious buyers”.
“Kadjar is made in Spain so you have to import the car from Spain and all the logistic costs and so on and it is not so cheap,” he said.
“The Koleos is coming from Korea. We need as well to look at from value-for-money perspective, if we import the Koleos from Korea with a trade agreement, with shorter logistic flow, what can be the price here on the ground, what can the price be for Kadjar and what can price be for Captur? “These are the things we want to consider. If we go for a line-up of SUVs we need to graduate pricing with the size of the product.” Renault has already confirmed it will build a global pick-up based on alliance partner Nissan’s Navara – Mercedes-Benz will also offer a version in the three-way project – and the ute is expected to come to Australia despite difficulties in positioning it against big players like Toyota’s HiLux and Ford’ s Ranger.
“Here you have got many one-tonne pick-ups. It’s a very important segment but it is very competitive with some very strong players importing a lot from Thailand at a very competitive price,” Mr Normand said.
“Can it be landed in Australia at a good price? And is it relevant with our brand equity and our brand-building process? (The) answer is yes, we will have this product before the end of the decade in the line-up globally. Application will be decided country by country according to this mix.” Renault-badged versions of the ute will be produced in Mexico and Argentina for Latin American markets, as well as Spain for other global markets.
Renault vice-president of product planning for Asia-Pacific Bruno Vanel said given the company will be coming into the segment late, it would need to offer a point of difference from the established players.
“In a crowded market you have to make sure that when you come you are going to bring something,” he said. “We would be almost the last one to come in the pick-up market so we have to make sure there is some relevance in coming.
“Obviously there is potential here, we just have to make sure we bring the right product with the right specs which we are working on obviously to make sure we can secure it in the future.” The next-generation Megane small car, due to be revealed at this year’s Frankfurt motor show, should give Renault a shot in the arm when it arrives next year, but a lack of right-hand production is keeping the stylish Espace – as well as the Latitude and Laguna-replacing Talisman mid-size sedan – away from Australian showrooms.
