French Giant Seeks to Bring DiversityMon, 09/01/2014 - 17:13
Q: What role has Mexico come to play in Renault’s global and regional growth strategies and how has it evolved?
A: International development is one of the key factors in Renault’s growth strategy. We have expanded operations in Russia through an alliance with AvtoVAZ, and last year Renault was the market leader among the international brands in the country and ranked second in the local market. Another example is China, where last December we signed an agreement with Dongfeng enabling Renault to create an industrial facility in the country. The Latin American region is the second in importance for the international growth objectives of Renault Group. South America plays a very important role in our growth strategy, together with the industrial facilities the group has in Brazil, Argentina, and Colombia. With a local market of over 1 million vehicles, our strategies for Mexico are centred on gaining market share with products adapted to local needs. In December 2013, our market share was around 2.2% and our strategies focus on gaining more market share with each passing year.
Q: What strategies does Renault have in place to increase its market share?
A: The first step entails introducing new models to the market. Koleos was one of the first vehicles to be part of our new growth strategy, which was launched in 2009. Nowadays the bestselling car in our range is Duster, launched in Mexico in April 2012. Since its international launch in 2011, it has been an international success with more than 1 million units sold worldwide and the same goes for Mexico with over 20,000 units in almost two years. Our second most sold car in Mexico is the Fluence, an attractive sedan that satisfies the necessities of the consumer in this market segment. We will continue to focus on the main market segments as well as light commercial vehicles because there is an important opportunity for growth in that sector.
Q: Which role has the alliance with Nissan played in the development of Renault’s positioning in the Mexican market?
A: The Renault-Nissan alliance has been present for 15 years and it is considered the most successful alliance in the automotive industry. Without doubt it has been very productive and profitable for both brands. Carlos Ghosn has stated that creating and furthering the development of profitable synergies between brands is the foundation of the alliance. Thanks to this, many industrial and commercial projects saw the light of day, including Renault Mexico. In 1999, the CEO’s of Renault and Nissan announced the return of Renault to Mexico with the support of Nissan. In 2000, Mexico became the first country where Nissan and Renault shared industrial capacity and commercial experience. Thanks to the alliance, Renault’s return to Mexico after 14 years was a success. When Renault returned to Mexico, the brand was able to benefit from the experience Nissan had in commercial and business development in the country and integrate Nissan dealers into the Renault network.
One of the main pillars of the alliance is to have separate brand identities while allowing for the sharing of best practices and profitable synergies, always with a winwin focus. The analysis and research of new synergies is continuous and applies to different areas such as purchasing, engineering, industrial activities, logistics, and HR. The alliance in Mexico is recognized as one of the best in the world thanks to the synergies that have been created.
Q: Being two companies with development strategies, what have been the challenges that you have encountered in the development of the alliance in Mexico?
A: Each brand has its own development strategy, meaning that despite the alliance, we compete with vehicles in the same segments. The principle of the alliance in terms of commercial life is that every brand has its own objectives. Competition in the markets remains part of the game, and to divide market segments between the two brands would be impossible in many respects. The nature of the alliance depends on the country. In Mexico, Nissan has a bigger market share, but in France, Brazil, or Argentina for example, the situation is reversed with Renault being the leader. The ultimate vision of the alliance is to optimize synergies without altering brand identities in order to create profitable economies for both brands.
Q: Do you intend to develop production capacity in Mexico in the coming years?
A: We do not have local production in Mexico; instead we import from Colombia, Korea, Argentina, and Spain. In other countries, we share facilities with Nissan, but no concrete project has been confirmed in Mexico. However, we are working on it.
Q: How are you harnessing new technologies to improve your product offering in the Mexican market?
A: Our strategy as a brand is to incorporate innovations across all vehicle segments and make mobility and innovation accessible to all. Technology and innovation have always been important for Renault, and alongside Nissan we have made important advancements with electric vehicles (EVs). The number of EVs sold by the alliance in 2013 topped 66,809 worldwide, and 37,000 of those were Renault vehicles. Renault is the first brand in the world to offer a range of four EVs. With 37% of the market, Renault is the leader in the commercialization of EVs in Europe. The most important part of an EV is the battery and our innovation in batteries allows us to sell the vehicle in Europe at the same price as a thermic car. At the end of 2013, we presented the EV Twizy and Kangoo to the Mexican market. Customers representing international brands with a presence all over the world have proven to be very interested in the EV Kangoo model in order to integrate them into their fleets. We offer our customers the opportunity to acquire the EV Kangoo or Twizy through Renault Enterprises, although these vehicles are not yet available in our dealership network. International companies contacted us directly as they were familiar with these models and were interested in acquiring them for use in Mexico. We could say that our strategy with enterprises is proving to be popular, so EVs are soon to be introduced. It took more time than we expected for clients to get used to the idea of owning EVs. The project is there, the economic equation is interesting for the customers, and Renault has the possibility of introducing this new technology to the Mexican market and many other international markets. It is important to have private and public partners that will support the development of the needed infrastructure as, for example, we have done with supermarkets in France. Offering EVs to the general consumer market will depend on different factors, but the crucial one is the access to charging stations. This is why the enterprises commercialization model that we are promoting is much closer to reality than selling EV’s to the general public in Mexico.
Q: What were the reasons behind the decision to only offer the Koleos 2x4 and stop offering the 4x4 version?
A: We were offering the Koleos 4x4 in Mexico, but the cost of production was higher than for the 2x4 version of the car. Mexico is a price-driven market and we decided to stop supplying the Koleos 4x4 as there is no market for this product in the country. The market demands a 2x4 vehicle for this segment since the 4x4 are more driven as pick-up trucks.
In the same vein, we launched the Duster 2015 in Mexico in May 2014 that will be price competitive and offers options for both urban environments and off-road settings. Its five models range in price from MX$229,000 (US$17,500) to MX$289,000 (US$22,200). The Duster SUV was first launched in Mexico two years ago, and with 23,000 vehicles sold since then, it has become one of our biggest sellers here.
Q: How do you deal with the differences in purchasing behaviours between Mexican customers and their European counterparts?
A: In Mexico, people tend to have a faster approach when buying a car. People want to see the car, make the decision, and take the car right away. If we fail to fulfill their needs in a short period of time, it is likely that the customer will compare the car with other brands and buy a car that is available right away, as they do not want to wait. We have to handle our stock with care, and we have to be very careful because we do not produce in Mexico as other brands do.
Q: How do you develop your dealership network to be intune with the needs of the consumer market?
A: Customer service quality is a very important issue for our brand. With 90% of clients recommending the service received by us, Renault Mexico has the highest quality in aftersales and customer satisfaction compared to the rest of Latin America. It is important to be close to the dealerships in order to understand what the customer wants and take their opinions into consideration. We have expanded our dealership network to 63 sales points, and as we grow in volume we will need a network that will expand with us. Firstly, we have to ensure that the dealerships offer the best quality in sales and aftersales service, while following our standards and the brand strategy. In the upcoming years, we will develop new dealers in order to keep up with our expansion plans. An interesting and differentiating factor that distinguishes Renault in Mexico is the antique car clubs, which are very active and passionate, and they are our real brand ambassadors. These clubs transmit the history of the brand, and it is important to maintain this time continuity because it gives us unique brand identity and brand strength. Through these clubs, we join the past and the present, allowing the customers to see our origins and have a different vision of our brand.