Renault calls for reintroduction of scrappage scheme across Europe

Renault calls for reintroduction of scrappage scheme across Europe

13/06/2012 in News, All News, Car Manufacturer News, Dealer News

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Renault calls for reintroduction of scrappage scheme across Europe

Renault chief operating officer Carlos Tavares has called on European governments to reintroduce scrappage schemes or “other market subsidies” to boost car demand.

Tavares told Reuters he would like to see support for the European and French automotive markets.
Several dealers have also told AM they would like to see the scrappage scheme reintroduced as they describe it as “cost neutral” due to the VAT the Government makes back on the scheme.

Dealers sold over 330,000 units under the scrappage scheme in the UK which started in April 2009 and offered a £2,000 discount (£1,000 from manufacturers and £1,000 from the Government) on a new car.
Research from Glass’s at the time showed that the vast majority of scrappage scheme sales were not the “pull forward’ sales many in the industry had feared.

According to the research, more than 90% of new cars bought under the scheme were sold to customers who would not otherwise have bought a new car.

Fewer than 10% of customers who bought under the Government-backed scrappage scheme said they planned to buy a new car in future years.

Do you think a scrappage scheme should be reintroduced in the UK? Leave a comment with your opinion on this story in the box below.

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Renault (UK)

Renault has been focusing on product quality and service in its bid to win back customer confidence, but the next challenge is turning that into stable market share.

Strategies include focusing on product-based selling rather than discounts and altering perceptions of the brand. At the end of 2011 it announced it was to cut its network by a third and will also be cutting the Laguna, Modus, Wind, Espace and Kangoo car from its model range from February 1.

The 190 dealer network will go down to "around" 135. Some of the closures will be within the Renault Retail Group but Renault was unable to quote an exact figure as discussions are ongoing.

The move is aimed at returning the French carmaker's UK operations to profitability as AMi understands 50% of the dealer network has been running at a loss.

Effort is also being directed at retaining more customers after three years to generate greater parts and servicing income.

Stabilising market share and building brand image may involve selling fewer cars, but with a greater focus on profitability as Renault drives towards its challenge of introducing a raft of electric vehicles. Market share has fallen annually since 2010 - a not unexpected result, the manufacturer says, calling it a "strategic move". 2012 saw a new Clio, more efficient engines and a push on electric vehicles, the Z.E range.

Renault has also launched a dealer star rating to allow customers to share their experiences at each of the French brand’s dealerships online.

In June 2013 chief operating officer Carlos Tavares told AM the business in the UK needs to sell 75,000 units a year to be sustainable and wants to reduce the amount of discounting on the model range.

Renault registered 40,760 cars and 14,710 vans in the UK last year which takes it to 55,470 units combined.

Note: Manufacturers administer the franchised contracts for cars and LCVs in different ways. Broadly, for some the contract to sell cars and LCVs is managed through a separate dealer contract. For others one contract covers both vehicle types.

AMi seeks to acknowledge the difference and reflect it in the count of each dealer groups total franchised outlets (franchised businesses) and sites (locations).

Renault administers car and LCV sales under a single contract.

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Comments (2)

kevthebass - 137 weeks ago

I agree with racer47, there is overcapacity in the car industry and europe is a saturated market. Not sure a scrappage scheme would work so well again, finance is much harder to come by, especially for those trading up from a "scrapper". Renault's problems are down to years of poor quality products and a loss of design direction. The buying public will no longer put up with poor quality cars, and they don't need to. The Japanese and German manufacturers, and I include Seat and Skoda in that, produce better made and arguably more stylish cars. Renault have undoubtedly improved their product quality, but far too late, plus styling wise they have lost the plot. The Renault dealer network in the UK is almost universally awful. Even the loyal French are deserting the brand.

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racer47 - 137 weeks ago

Maybe the Manufacturers would be better off if they stopped overproducing cars .. . . Scrappage is not an enviromentaly friendly solution, as the Carbon footprint made by shipping raw materials around the world, producing the power to run the factories and then shipping the finished product around the worls by far outweighs the CO2 produced by older cars. Renault has a massive issue with their product, they have failed consistantly in the Company Car sectors and despite creating the niche have failed spectacularly in the people carrier sector. The cost of franchise is expensive and their network is poor with dismal profitability and customer satisfaction hence the slashing of the range and dealer network. If they along with Peugeot and Citroen stopped designing product aimed at the French market and oozing with gallic styling, or dismally bland vehicles and then expecting everyone else in Europe to accept the product they might actually get somehwere. A lot of Nissan's design and technical work is UK based, so why as an alliance partner can Renault not see the benefit of using the same teams and designing product specifically for a nation of car lovers . . . A scrappage scheme is just a sticking plaster, do some robust root cause analysis and you'll realise that the solution is to focus on emerging markets and capitalise on opportunity, instead of their bsuinesses being subsidised further!

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My dealer brand and reputation: 42.9 %

The manufacturer's brand and reputation: 42.9 %

It's about the product, not the brand: 14.2 %

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