José Luis Montiel
Director General
Renault México
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View from the Top

French Manufacturer Prepares for Strong Comeback

Tue, 09/01/2015 - 15:23

Q: With the recent introduction of new Renault models to the market, which vehicles have had the most success in Mexico?

A: Our most important product has been the Renault Duster. The reason behind this was its innovative design as an SUV and its unique position in the market within the sedan segment. It has been a really attractive product with first-time truck owners, and it has gained enough presence to be widely recognized in the market. This vehicle normally covers 40% to 45% of our total sales, which speaks for the excellent qualities of the car while also showing large opportunities for the rest of our models. We want to have four similar products that allow us to offer wider diversification in the market, as well as lowering risks and improving market coverage. One of the strongest candidates for this list is the Renault Logan, which is a 4-door subcompact sedan with some of the richest content in its category. We will also present the new generation Renault Stepway by the end of 2015. This model is built on the same platform as the Logan and is a crossover vehicle that targets the compact segment. While we are still looking for the fourth vehicle to include in this strategy, we will be launching the new Renault Koleos in 2016, and we will also have the new pickup truck from the plant in Cuernavaca.

Q: What has been the response from the Mexican customers regarding the new Renault Kangoo?

A: The Kangoo has been selling quite well in the leisure activity vehicle segment, also known as the car derived van segment, which is mainly focused on city vans. Our market share with this vehicle is close to 35%, and it has been quite popular with SMEs in the commercial segment. There are still some opportunities for this model, but we have been quite pleased with its performance in the market. Additionally, these were the first cars specifically used as taxis for people with special needs. We pitched the model to the state government and it was finally chosen as the best car for this purpose.

Q: What strategies are you implementing to reach the target clients for Renault?

A: Our most important point of contact is our aftersales service. We know when our clients need to come to our shop, and we are always prepared to receive them. This service is complemented by our financial brand, Renault Servicios Financieros, which helps us keep in touch with our customers. There are still things to improve, but we want to reinforce the idea that we are a reliable brand.

Renault is well known throughout Latin America, with a 17% market share in Colombia, 10% in Argentina, and 7% in Brazil, which is the second most important market for the company after France where we have 25% market share. Right now, we have a 2% market share in Mexico, when the market is growing more than 20%. Therefore, our priority is attracting as many new clients as possible. Furthermore, by 2020 we want to double our sales from 25,000 units to approximately 50,000.

Q: What plans do you have for the development of Renault’s dealership network throughout the country?

A: Right now, we are not looking to expand our network. We want to first update our analysis in terms of coverage and performance, considering our growth strategy for the next five years. Ever since we returned to Mexico in 2001 we have neglected this issue, but once we understand the right way to target the market, we will be able to determine how we want to develop.

Renault is using specific tools to track the performance of every dealership, and we are considering every aspect of the different regions we are analyzing to better assess the impact dealerships have on our national operations. Currently, we have 67 points of sale, which we want to grow to 70 in order to duplicate our market share over the next five years. Nevertheless, we still cannot say if these numbers are what we really need to achieve the ambitious goals we are setting. Once we have this analysis complete we will determine the best course of action for our strategy.

Q: How much opportunity do electric vehicles have in Mexico?

A: It is expected that these vehicles will gain some real ground by 2020. The Renault-Nissan Alliance has already started to work in this segment, Renault with the Twizy and Nissan with the Leaf. On Renault’s side, we are currently preparing a re-launch for the Twizy to further promote its presence in the market. The vehicle is already available in our dealerships, and it has a really attractive and unique design. It has a range of 100km with a maximum speed of 90km/h, it seats two people, it can be connected to a normal energy outlet with an energy regulator, and it only needs seven hours to be fully charged. Furthermore, it can charge in just three hours with a 220V converter, and it has the advantageous price point of MX$285,000 (US$18,400), which is quite competitive in the market.

Q: How does the competition between both companies in the Renault-Nissan Alliance help or hinder Renault’s development in Mexico?

A: The competition has not limited us; on the contrary, it has pushed us to be better. Although there are some synergies between the brands in terms of manufacturing, costs, and purchasing, we remain competitors and each company strives to attain the best performance in the market. We respect every competitor, and the fact that Nissan is part of our alliance does not change our position. Ultimately, for us, it is an opportunity to prove we can do things much better. This is a crucial moment for Renault in Mexico, and it is a real opportunity to make everything exceptional.

Renault has structured its development around three main factors. The first is product coverage, as we want to target the market more extensively and more efficiently. Currently, we are targeting 50% of the industry’s segments, so we want to cover close to 85% by 2020. The second factor is brand recognition. Even though we left the market for a while, we are a company with a strong tradition in Mexico. However, many people do not know our vehicles or they do not have the right image of our brand, especially in terms of the newest generations. Less than 50% of the Mexican market knows Renault, which means there is an immense opportunity to grow our presence. Finally, our last strategy involves our dealership network. We want to have a win-win relationship with every one of our dealers, revising their performance according to their region of influence. That way, we can ensure there are no distributors working with lower standards than those we have defined for the country.

Rather than having an effect on the commercial side, Nissan’s presence has helped us in our corporative development. To this day, we are fully supported by Nissan’s back office services, including customs, logistics, legal, human resources, and purchasing operations. In terms of the commercial plan, each company has its own strategy.

Q: What plans does Renault have for its new production site in Cuernavaca?

A: We are planning to utilize Nissan’s high manufacturing capacities in order to manufacture 1-tonne pickup trucks. The design and components will be totally independent from Nissan, and our commercialization strategy will be completely different. We still need to determine the total investment and the production volumes we are going to manage, but we have already established that this model is going to be directed toward the local and the Latin American markets including Colombia, Chile, Ecuador, and Peru. This is an opportunity but also a challenge, given that we do not have previous experience in the pickup segment. We are going to start with 2,500 units, and we will work our way up based on the results we obtain from our market analysis and the brand recognition we are able to generate. We are confident of the success of this product, and we are supported by all the experience Nissan has in this segment.