The Logan is the first vehicle in Renault’s X90 series, which is at the heart of its strategy to target emerging markets. Renault’s concept of producing budget vehicles under a different brand identity should prove successful in those regions, where affordability is key. However, it runs the risk of denting its image if it compromises too much on the build quality of the vehicle.
The French manufacturer is hoping that sales of the so-called ‘€5,000 car’ will equal those of the popular Megane, which last year sold 700,000 units, mostly in western Europe. The production of the new vehicle should start in the middle of 2005. The car is intended for sale in Russia, eastern Europe and Latin American countries. It should also be introduced in China later this year.
The Logan will be manufactured in Romania by Dacia, Renault’s subsidiary in the country, which it bought in 1999. In most countries it will also be sold under the Dacia name, though in a number of markets, notably Russia, it will be badged as a Renault. The launch of this economy model is aimed at consumers with limited budgets, and is a further plank in Renault’s strategy to attain four million annual sales by 2010. By launching the new sedan, however, Renault is risking acquiring a reputation based on the concept of ‘new but cheap’, which could jeopardise future opportunities in these developing markets. This is a particular risk if the car is to be sold openly as a Renault model. On the other hand, if the Parisian firm wants to achieve its targets, it must look outside western Europe for future growth.
By using a manufacturing method focused on reliability and cost cutting – the car shares a number of parts with both older Renault models and the Nissan Micra – Renault is confident of making an approximate 5% operating margin.
There is no doubt that Renault’s Logan has been launched to respond to growing consumer purchasing power in central and eastern Europe. Renault started to reinforce its position there by taking over the Romanian manufacturer Dacia in 1999, and the manufacturer’s ambition is to make that market a major source of growth in years to come. Its affordable Logan could be an ideal means of achieving this, provided the car lives up to its promised ‘reliable’ tag.