The first quarter of the year has seen a vindication of Renault UK boss’s strategy to become a profitable operation through a fall in market share.
In September Roland Bouchara laid out a plan to return to profitability by accepting a smaller standing in the market – to turn aside from what he called the industry obsession with market share.
He made it clear Renault would stop the rot that had seen market share fall from 7.6% in 2002 to 2.7% in September and achieve 5% by the year end.
While that target was missed – the company ended 2009 with a 3.17% share – this year has seen Bouchara’s strategy begin to pay off.
March registration figures show Renault’s market share at 5.26%, a year-on-year improvement of 105% – the biggest of any manufacturer except scrappage champion Hyundai (145%).
Len Curran, Renault UK director of commercial operations, said: “Market share has grown throughout the first quarter and March was very strong.
"We have a balance of sales across all sectors, we’re not forcing up share through fast-cycle business – the strategy is working.”
But the drive to profitability is not without obstacles. Latest figures available for the year to the end of February reveal the network running at a loss of on average £20,000 per outlet – 1.6% of turnover.
This has been blamed on January’s blizzards.
“We have been catching up in March and are confident revenue will be where we expect it to be,” Curran said.
2010 Q1 had seen 33,000 new cars delivered, compared to 17,000 in the same period last year.
Dealer margins, he said, were between 1.5 and 2.0%, with some groups reporting 3%.
Robin Cook, Renault dealer council chairman and managing director of Bristol-based Carco Group, said: “It’s encouraging that we have become a 5% share franchise without being one of the main scrappage beneficiaries.”
While the end of scrappage should see a further growth in market share, he warned that exchange rate pressures (one of the factors prompting Renault’s network restructure) would “regulate” growth.
“I see us being a stable 5% franchise in the long-term,” Cook said.
Areas of concern were used car sales and the “void” in aftersales.
The proportion of warranty work has fallen from 35% in 2006 to less than 10%.
The network restructure has been continuing for three years and has seen a reduction in sales points from 260 to 200. Individual sites have also been reduced in size to cut overheads.
Curran said: “About seven years ago we had the network size for a brand with a 10% market share. No manufacturer, except Ford and Vauxhall, can look to be that now.
“Our network structure reflects our performance capacity.”
The restructure is due to be complete by 2011 when termination periods for dealers exiting the franchise are concluded.
New customer satisfaction surveys introduced
Renault customers are being asked to complete new satisfaction surveys designed to more accurately measure the dealer’s performance.
The manufacturer is replacing the survey based on whether a customer is satisfied with one that asks: “Would you recommend this dealer to a friend?”
The response choices are ‘definitely’, ‘most likely to’, ‘not sure’ and ‘definitely not’.
If a customer gives any response other than ‘definitely recommend’ they are asked to respond to 20 further questions.
These are designed to reveal details of the buying experience, for example, the reasons for purchasing the car.
Curran explained the reasons for the change: “It provides a better representation of a customer’s experience. The satisfaction-based question allowed dealers to be marked down for problems beyond their control – for example, if a car took two weeks to be delivered.
“The new survey looks to remove this risk.”
Cook said: “The impact of the survey remains to be seen.”
The new survey is set to be the standard for Renault dealers in the UK from June. It mirrors that used by Renault in Europe and is the same CSI system used by Nissan.
The measure of a customer’s likelihood of recommending a brand to a friend is also the basis of the well-known Net Promoter Score, used by companies such as Apple, Autoquake and Amazon.com, that groups customers into three categories: promoters, passives and detractors. It is designed to make companies and employees accountable for how they treat their customers.