Renault shifts mainstream

RENAULT is planning a slow and steady sales recovery in Australia on the back of new models and a shift to more mainstream pricing.

“Badly hit” by the recession in the first four months of 2009 and with no short-term substantial market lift in sight, Renault Australia says it is nevertheless confident that the next-generation Megane small car due in the first half of 2010 should double annual sales volumes in Australia from Renault’s current sub-3000 units.

And while the Koleos compact SUV released late last year is still finding traction in the market, the car is considered “a pillar” for Renault since it sits “more centric to the segment” than any model in the recent history for the brand in Australia.

Additionally, Renault says its research is showing that consumer intention to buy in the compact SUV segment is buoyant, and that Koleos sales will soon reach a sustainable 100 units a month as supply for the petrol-powered models improves.

Renault admits that it fluffed the Koleos model mix by bringing in too many diesels and not enough petrol models in the first few months of sales in Australia, and that customer demand for the petrol version had caught it by surprise.

From top: Renault Megane hatch, Renault Koleos, Renault Laguna Estate.

The additional Laguna models released this week, with lower prices, a more appealing model spread and a better warranty, are expected to increase showroom traffic markedly for a model Renault claims is now “a European car at a Japanese price”.

Finally, the long awaited Cup version of the iconic X85 Clio Renaultsport 197, as well as consistent demand for the current Kangoo, Trafic and Master commercial vehicles, should help keep sales at last year’s level of about 2900 units.

This tally is still 400 units shy of the 2005 sales total, which included ample supply of the premium-light Clio and X84 Megane hatch models. Renault’s best year since Nissan Australia resurrected the marque here in 2001 was 4565 sales in 2002.

Renault also revealed that it was working with other right-hand-drive market divisions in the region, such as Renault in New Zealand, Japan and Singapore, to help bring in more suitable models in bulk, to help keep costs down.

Renault’s sales director Mark Hawkins said Renault was returning to its roots with more accessible pricing. This reflects the brand’s European marketing model.

“The (new) pricing of the Laguna is closer to volume players,” he said.

“Traditionally, (Renault) is not about niche marketing.

“(So what is needed is) a gradual repositioning in the Australian market place in each segment (as future product is released).

“The Koleos is the first of the repositioned Renaults (but there will be more).”

Managing director Rudi Koenig said the gradual upward movement of key competitors would help Renault prices converge on the mainstream.

“The Japanese like Honda and Mazda have been moving slowly upmarket, so there is (a meeting of brands) going on,” he said.

“We are currently still not at a sustainable volume level to enable us to compete strongly for future growth, and we still don’t have enough of the products at the right price point which will give us the credibility and volume in their segments.

“At 3000 (units per year) we have to be very careful with our investments in marketing, because it is too easy for things to go against you, like market declines, and then all of a sudden you can lose money very easily.

“So you always have to make sure your spending does not go out of control, and it stifles your ability to invest in the future.

“The 4000 to 7000 mark, I believe, is the basis where you can drive your volume further up, because you are actually generating enough funds to invest to growing the brand.

“You are getting more credibility with your suppliers when you are negotiating your product, and it easier to justify on a profit/revenue cost equation basis getting more variants, more engines and more transmissions.

“The smaller your volume is, the less options you have, and therefore if you are selling more cars you are attracting more dealers. It is a natural growth.”

Mr Koenig said Renault needed models such as the Koleos and 2010 Megane to sell at least 100 units each a month to achieve these growth goals.

“The strategy we’re adopting is the introduction of international Renault products,” he said.

“The first of these was the Koleos, which is close to achieving the target we set for it, around 1.2 per cent of its segment. Our target was 1.5 and above, and our next model in this push is the Megane.

“Those two vehicles’ volume combined will give us more volume than we get for the whole brand right now.”

However, Mr Koenig admitted that the tough economic conditions could still derail his strategy and that the next year would be extremely tough for Renault in Australia.

“Obviously the current global situation is affecting everyone, and the plan I have approved for growth in Australia is now under short-term threat because of the global economics.

“This is because Renault, like everybody else, is cutting back on development funding, cutting back on projects and cutting back on resources, which is making the job harder, and it means some of the resources for my growth plans have been pruned back late last year.

“We are now in a process of reviewing our cost basis so we can make sure that economically we remain viable.

“The battle is for us to make sure that the short term can improve our financial position, so it doesn’t put to risk our long-term growth strategy.”

Read more:

RS Coupe leads Renault’s small-car revival

Renault digests impact of global strategy

First drive: Renault reduces Laguna prices