Dacia, Renault’s budget car brand, is playing its part in helping Renault to maintain margins in Europe’s cut-throat car market, according to Renault’s entry range programmeme director.
Arnaud Deboeuf told delegates at ANE Congress in Paris that the company’s strategy with Dacia has enabled it to differentiate products for different market needs to maximise margins.
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Deboeuf said that Dacia “is one of the symbols of the new consumer trend in metro markets”, appealing to an emerging market group that is not motivated by traditional automotive product strengths.
“For many years automotive companies have planned to increase their turnover, to expand lineups, add content and raise prices,” he said. “The underlying idea was that we could raise the costs of the cars because we could increase the customer’s willingness to pay. The car was a symbol of status and achievement. More recently things have changed.
“We have seen the emergence of a large portion of car buyers who no longer show their pride in the most recent or expensive car model, but [they] would rather invest in high-tech, leisure…and they are no longer looking for status when they buy their car. They are looking for a ‘good enough’ offer, a ‘good enough’ level of feature, a ‘good enough’ level of comfort.”
Dacia, he said, addresses these changing consumer trends and demands.
Dacia, Deboeuf also maintained, helps Renault with its pricing and brand positioning in the highly competitive European market. “Dacia protects Renault from the current price war [in Europe]. We can increase our market share with Dacia offering high margin lower priced models and we can allow Renault to maintain higher price positioning and a higher brand image.”
Deboeuf described a features and content strategy for Dacia models that helps to maintain margins. With the second generation Logan/Sandero Renault needed to reduce cost in order to add some features that meet changing demands and regulatory requirements for sale in Europe. “We wanted to adapt our platform while keeping the spirit of the range. We gave ourselves the target of -15% [on cost]. New Sandero achieved four starts on the EuroNCAP tests with very good marks on front crash and occupant protection.
“But we refuse to add features like electronic cruise control because such features were not valued by all our customers. On the contrary we introduced features like navigation or rear park sensors because they were demanded by our customers. We try to keep the what we call ‘the Dacia spirit’ – an exceptionally low-cost target that provides the clear framework for product development. We are not pushing technology, but we are meeting customer needs.”
Deboef also told delegates that the entry range strategy pursued by Renault – with Dacia models badged as Renaults in some markets (such as Russia) – raised its entry level programmes unit sales to 953,000 in 2012, 17% ahead of the previous year. “The entry range and use of the two brands gives us strength when looking at positioning for different regions and markets,” he said. “It can also help to decrease exposure to market slowdown.”
