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Market trends: Renault struggles as sales decline

Renault almost seems to be two separate companies nowadays. On the one hand, the Dacia Logan has been the cleverest idea the industry has seen in many a long year, with worldwide production heading to-wards 750,000 per year by 2009. On the other hand, the Logan is not yet available in the UK, and the rest of the range is in dire trouble.

Overall sales have fallen by nearly a third in the last five years (see table), a rate not seen since Fiat’s near-implosion a few years ago. But Renault now is no pre-Marchionne Fiat: it is run by the most respected boss in the industry in the shape of Carlos Ghosn and has been responsible for the brilliant stewardship of Nissan. So what has gone wrong?

Starting from the bottom of the range, the Clio has not had the impact Renault might have hoped for. Compared to the radically improved Corsa, the Clio looks a bit “same old same old” and sales have halved since the last year of the previous Clio in 2004 (35,000 vs. 72,000 YTD).

The Megane has done no better, with sales down from 45,000 to 21,000 over the same period.

Renault itself says that the Megane styling is needlessly polarising and it will not make the same mistake again, but is that really the problem? At the beginning of this decade, Renault was determined to become the design leader amongst volume car manufacturers apparently to the exclusion of everything else. For someone who doesn’t like the styling, there is little else about the car of interest: it is hard to imagine a neutral buyer testing one against a Focus, Golf or Astra and concluding that the Renault is a nicer drive.

Now that Renault is going for more mainstream design, what is its USP? The new Laguna seems to be majoring on quality (following some serious admissions by Renault about quality defects of the old model), but is that enough? One can understand that the company has had so many problems with niche cars, from the Vel Satis, through the Avantime to the Modus, that it has lost some of its self-confidence, but it will need more than negative reasons (like “it won’t go wrong”) for people to choose its cars.

In the past, Renault has been very good at reading market trends with original models like the Scenic and original Clio. Now it needs to rediscover the right balance between designing cars for the heart and the head. Having had a few heart-breakers, it is going for the strictly rational approach, but does it need to work harder at combining both?

Renault sales YTD August

Renault sales have fallen by nearly a third in the last five years, with the decline since 2005 being most noticeable.

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