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Renault talks Turkey

Koleos call: Renault expects its new compact SUV to account for as many as 200 sales a month.

Low-cost suppliers to underpin French car-maker’s future growth in Australia

18 Mar 2008

RENAULT Australia is establishing stronger links with the French brand’s production plant in Turkey and its joint-venture program with Samsung in South Korea in order to revive its local sales.

Renault is growing strongly around the world, but its troubled Australian subsidiary has never matched market expectations and has failed to live up to projections – starting with a notorious 20,000 claim when the brand was relaunched here in 2001.

Last year it sold only 2909 units – just 49 more sales than in 2006 and 392 fewer than in 2005, so it has lost ground in a booming market. It is now striving to lift its market share from 0.3 per cent to one per cent.

Despite its disappointing sales, managing director Rudi Koenig remains upbeat about Renault’s future in Australia and believes it can still reach 10,000 annual sales once the model line-up and supply is sorted out.

He conceded that Renault needed a volume-selling model to reach that target and was forging closer links to OYAK-Renault in Turkey, with the aim of sourcing as many vehicles as possible from that plant.

The two models seen as volume opportunities for Renault in Australia are the new Koleos – a Nissan X-Trail-based SUV built by Samsung in Korea that will launch here in September – and the next-generation Megane small car that is due to be revealed at the Paris motor show in October before going into production in 2009.

 center imageLeft: Renault Australia managing director Rudi Koenig.

Mr Koenig told GoAuto that the new Megane will be the car to capitalise on the growing demand for small cars in this country, which would once again seem to leave the new Clio out of calculations for a return to Australia as a mainstream model.

He said that Renault cannot offer a 1.4-litre eight-valve Clio that could compete on price with the sub-$20,000 Peugeot 207, so we will have to be content with the arrival in June of the niche performance Clio RS model.

Turkey already builds the current Megane for the Australian market and will also produce the new model, which is expected to be a less-challenging design than the existing car.

Mr Koenig said that one of the problems for Australia has been getting leverage from the various production sites, so he is keen to establish a much closer association with Turkey to improve Australia's bargaining power and make Renault more price-competitive in this country.

“There’s no argument that we need to sell more product,” said Mr Koenig. “We have underperformed and you can’t deny that.

“The issue we’ve always had is identifying what product in our range can give us the volume base to grow the business. We haven’t had a (Peugeot) 307 or (Volkswagen) Golf equivalent.” Renault Australia’s new sales director Mark Hawkins also told GoAuto that Renault was forging new ties in Asia that should alleviate supply problems Down Under.

“One of the things that we have been concentrating on is putting down a manufacturing footprint in Asia, and that’s obviously there with Samsung in Korea and has started with a relationship with Mahindra and Mahindra in India – and we’ll be announcing further developments, which will help us lower our cost of distribution and therefore make us more competitive in terms of getting cars to the marketplace,” he said.

The first of these will the Koleos out of South Korea, a vehicle that Mr Hawkins said would make an immediate impact in sales terms.

“Today, we access 34 per cent of the marketplace with our product range. ‘Tomorrow’ – with Koleos – we’ll essentially move to an existence in more than 50 per cent of the Australian marketplace,” he said.

“The first step (in increasing sales) is to make a splash with Koleos. Then we have other product plans down the line during the next two or three years which will help us move forward.

“Essentially, we want to get to a market that is ‘buyer batting’ for one per cent market share and moving up from there. That’s the first benchmark.” With the Megane, Mr Koenig conceded that the controversial styling of the hatchback had not been well accepted.

“We’ve made a decision that (the hatch) is not going to drive volume for us we think the sedan has got more potential,” he said.

To that end, Renault Australia recently dropped the Megane sedan’s price by $3000 to $24,990 and believes that it now represents the best value in its segment, but the big push will come next year with the launch of the new model.

However, Mr Koenig concedes that, despite Renault taking international sales more seriously than in the past and recognising Australia as an important international market, its financial support for the local subsidiary is “not to the same extent that VW has”.

Read more:

Renault's Asian move

Geneva show: New extreme for Renault Megane

Melbourne show: Renault to go Koleos

The Road to Recovery podcast series

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