How Renault got its va va voom back

 

Under Frenchman Eric Basset, Renault Ireland has soared – but can it maintain the momentum, asks MICHAEL McALEER

FOR MANY motorists Bill Cullen remains the face – and voice – of Renault in Ireland. Yet its turnaround in the last two years has been led not by the Dubliner, who relinquished the brand’s helm several years ago, but by a Frenchman, Eric Basset.

Since taking control in 2009, the brand’s presence on the Irish market has been transformed. In the year he arrived, Renault finished with a market share of 4.2 per cent. Last month its share in the passenger car market stood at 9.3 per cent, it held just under 14 per cent of the light commercial market, and its Fluence and Mégane models are in the top 10 best selling cars for 2011.

When he spoke to The Irish Times back in 2009, he outlined a plan to radically overhaul the brand’s image and turn it into a rival for the best-known brands here – at the time it seemed like wishful thinking, but in many ways he has delivered.

Competitors explain the dramatic rise in Renault fortunes by suggesting it has “bought market share” through its sizeable advertising voice and discounts on new cars. Basset accepts they have “made themselves heard” during the past 18 months, but denies the firm’s spending has been much larger than the other big players.

“We’ve spent some money but the marketing has to be considered not just from the visible point of view. First thing to have in mind is that we’ve made a choice to relaunch ourselves through traditional medias, whereas at the same time our competitors decided to direct media investment to other kinds of marketing.

“When some companies put additional support on the models, like sponsoring a sports team for example, they spend millions on this but people don’t always equate it with marketing. Nobody considers this as marketing but it’s coming from those budgets.”

Renault itself has not been averse to sponsorship deals, most recently backing Today FM’s Ian Dempsey Show and Ireland’s paralympic team. The scrappage scheme has served the brand well, but might it cause some pain when scrappage ends in July?

“Even if you see Renault on top of new car sales tables under the scheme, the fact is the scrappage we do is a minority of our sales.”

He says the cars sold under the scheme are done so at a profit, but he admits that consumers are far more value-conscious these days and that prices will not necessarily go up when it ends.

“After two years of sending the message of affordability, the Irish consumer will expect the motor industry to continue with a high level of competitiveness. Just because scrappage ends a customer is not going to think it is okay to add €1,250 to the price of a new car. They won’t accept a return to the old prices of the boom years.”

The dramatic rise in sales and fortunes brings with it some significant challenges, not least protecting the resale prices for a brand that has not always performed well in this regard.

“We are already protecting residuals. You need to tackle different angles in order to do it. First, you must be visible on the market for three to five years to defend your values and for a mainstream brand you cannot be below 5 per cent market share.”

That’s a significant statement from a brand that spent time languishing below 4 per cent before his arrival.

The second issue, he says, is controlling the stock levels. Due to relatively low volumes in the previous years, he says the market is not awash with used Renaults. That situation is further bolstered by the fact that the brand has been out of the hire drive market for more than two years and only returned last month.

The one area where Basset seems to have backtracked on his initial plans is in radically reducing dealer numbers. When he took on the role as Irish managing director there were 37 dealers and he seemed determined to radically reduce that number.

“At the time when we came here we weren’t looking at what to do to become a lead player, we were looking at what to do to stay alive. Renault was at 4 per cent market share with too big a network. We needed to prepare the ground for new Renault models, for electric cars, and for the arrival of Dacia in Ireland by 2013.. The strategy had to work or we would have to close up and just run the operation out of the UK.”

So far his plans are working, but his dealer network has returned to 23, and he believes they will need another five. He defends the appointment of new dealers, referring to the fact that its number of new car sales per dealership is among the highest in the market.

“At the end of March we had an average of more than 200 new car sales per dealer, and that’s one of the highest in the business, often in some locations twice that of competitors in the same area.”

As for the years to come, Basset sees his role as leading Renault to an even greater share.

“By 2013 we will have Dacia on the market and for with it and the other cars we will do 9 to 10 per cent in new passenger car sales. By 2015 it’s reasonable to say with an older car park, we can anticipate a market of between 110,000 and 130,000 new cars. That, of course, presumes the economy starts to recover. By this time we’ll be leader in the light commercial market, we’ll be doing 2,000 electric vehicle sales, 3,000 to 5,000 Dacias and then you have a group with 15,000 annual sales units.”

This September, the firm opens its finance arm, Renault Credit. It will provide consumer credit and dealer finance for stock.

“Wholesale operations will start in July and we’ll spend the rest of the year preparing the way for our entry to the retail market in September. At this stage we have no idea of rates. Our main competitor will be Volkswagen Bank with its rate is around 5 per cent. This is a very competitive rate. The interest rate for cars today would be, with no subvention from the firms, 8 to 10 per cent. We would hope to be able to offer competitive rates, but we will not enter into a war with other banks on rates: you see what that sort of thing did before in this country.”

The next phase of development is the arrival of Renault’s electric car range. First up will be the plug-in variant of the Fluence, due in December, quickly followed by its all-electric supermini, the Zoe.

Then, for the start of 2013, the budget-conscious Dacia brand will arrive in selected showrooms. Featuring a mid-sized SUV and a small family saloon, the range will suit the price-conscious Irish. And it’s arrival may well see Basset achieve his goals of establishing Renault alongside the likes of Toyota, Ford and VW as the biggest motor brands in Ireland.