Right now, change feels like the only constant in the automotive industry. Technology has disrupted the production process, customers are demanding more from their machines and OEMs are packing a wallop to keep them happy.
In such a scenario, why would the consumer keep you in the consideration set if your last product launch was about three years ago?
That’s the predicament facing French auto brand Renault in India, which has three models in its portfolio — Kwid (2015), Triber (2019) and Kiger (2021) — at the moment. That must be tortuous for the brand that shook up the Indian market with its dependable midsize SUV Duster (2013), beating even the then category leader Mahindra Scorpio in the game. It saw a rapid year-on-year growth in sales for a decade, going from 1,406 units in CY 2011 to 89,534 in CY 2020.
As things stand, with 1,800 units for the Triber, 1,150 units for the Kiger, plus another 603 for the Kwid, Renault’s total sales in June 2024 was just about 3,553 units.
So how did Renault slide so far behind and how does it plan to get back on track?
Shifting gears
Experts ascribe Renault’s sales decline in 2023 in large part to ageing products, and to counter this, the company has updated all three of its existing products this year without increasing the prices of any of these brands. It has also announced plans to launch five new cars, including an electric vehicle, in the run-up to 2027. The company will launch two brand-new SUVs — a compact SUV and a mid-size one — apart from the second generation models of the Kiger and Triber in the Indian market between 2025 and 2027. It will also introduce its first EV during this period with a high level of localisation, and, therefore, aggressive pricing.
Renault must elevate its strategy across product development, pricing, positioning and powertrain mix, asserts Puneet Gupta, director, S&P Global Mobility. “Renault reached its zenith around 2021 with sales of approximately 95,000 units. It’s imperative they readdress the five Ps of marketing (product, price, promotion, place and people) immediately.”
In recent years, Renault has concentrated its products and efforts in the tier 1, tier 2, and even tier 3 cities, neglecting metro markets due to growing competition, say experts. “This is a critical misstep, as a lack of aggression in key metros hampers the construction of an aspirational brand,” adds Gupta.
Two other areas it should focus on are ramping up production capacity and network expansion. Renault’s vehicles are manufactured at the Renault-Nissan alliance plant in Chennai, which has a capacity to produce 480 cars per day, and it has close to 500 sales and 530 service touchpoints across the country. “If Renault has a network of 500 dealers, Maruti has 3X, Hyundai has 2.5X. They also have service assurance and buyer trust accumulated over decades. Renault is looking to take them on, but with a three-car portfolio,” says Subhabrata Sengupta, partner, Avalon Consulting.
Sengupta hits the nail on the head when he asserts that network expansion will make sense and the attendant economies of scale will kick in only if it has a wider portfolio. “All its cars are competitively priced but they are not feature loaded enough for the increasingly sophisticated urban market upgrading towards SUVs. It will be difficult to take on the entrenched players and even get new dealers on board with such a meagre portfolio,” he says.
In its renewed push for the Indian market, Renault’s partnership with Nissan will come in handy, says Rushi Anandan, adjunct faculty, Strategy, KJ Somaiya Institute of Management. “One of the strategies that they will be using in India, one that has been quite successful for them globally, is platform sharing or rebadging. This can help them widen their portfolio while reducing costs substantially,” adds Anandan.
As it starts rolling out the new global Renault brand identity and customer interface across its network this year, some of the excitement around the brand will also snap back, say analysts.