Renault UK’s managing director Thierry Sybord has been in the post for just five months, having moved from running its Netherlands’ operation.
But he has already toured the network and outlined an action plan to turnaround the brand that has seen its market share fall continuously from 2002 until last year.
AM editor Jeremy Bennett asked him about the brand’s challenges ahead.
JB: What are your priorities as MD?
TS: My first and ongoing goal is to listen and in turn to understand, not to come here with a concrete plan.
So, in taking this role I met as many people as I could. I must have now met the dealers representing around 80% of our volume.
I ask everyone for their perceptions of the brand, the product and marketing, to provide me with an analysis of our strengths and weaknesses.
JB: So, what have you learned?
TS: The strength in our brand is in our product. In the past we had some problems, but now everyone says we have got it right, generally.
For example, I hear the latest Megane is the best ever. Dealers are telling me the competency of Renault staff is among the best in the country.
Thirdly, people in the network are professional and polite even if what they has to say is negative.
JB: And weaknesses?
TS: We still suffer from the past when we had difficulties with the quality of our products and the image of Renault is not so clear.
We’ve lost the magic of the brand.
I’ve said it’s a strength, but our network is also a weakness.
Because in the past it has been difficult to sell cars we lost the skills of selling and resorted to selling discounts.
The more you do that the more you destroy the brand image. We must now work with the dealers to change the focus.
We have to work with the network to go from a discount-based sell to a product-based one.
At the heart of this was our complexity – our range and our pricing. We are a French company and sometimes there isn’t the necessary pragmatism in our DNA. And we lack consistency.
The result was we confused ourselves. We did one thing for three months and then changed things. So, the dealers’ natural reaction was to discount to sell our cars.
JB: How do you recover from this position?
TS: I have established an action plan to try to correct our weaknesses. I am already working more closely with the network, sharing everything.
JB: And the action plan?
TS: From January we simplified everything – the range, prices, bonus and sales programmes.
We had a very good year of growth in 2010, more than any other manufacturer, achieving a 5% market share.
In 2011 we do not want to continue to grow, but instead stabilise our market share between 4.5 and 5%.
Sometimes it’s better to sell less cars and be more profitable. I know that if I want to sell more cars I can reduce prices or the dealer margin, but this is not the right way to work.
The most important challenge for Renault in the next few months is to work on the perception of the brand.
You will be seeing new advertising created especially for the UK, starting with the Megane experiment (“Can a car really change a town?”) and followed by the Clio and the RenaultSport range, trying to talk more about the products.
The Va Va Voom campaign for Clio has also returned this month (www.facebook.com/cliovavavoom).
JB: How do you ensure dealers are your ambassadors?
TS: We have a lot of quality and training programmes. Every new sales executive or sales manager will spend a day at Renault UK’s offices to ensure they understand us and share our objectives.
We shared them at our dealer conference in Madrid. A working group has also been formed with dealers and Renault staff, representing every level of the businesses, so receptionists as well as sales managers.
JB: What’s its purpose?
TS: To identify ways of progressing the business such as reducing costs of the franchise to help dealers away from selling based on discounts, using customer feedback to help refine the range.
A concrete example of working together was the simplification of the range (under the ‘Simplification’ pro-gramme Renault is reducing choice by 30% in 2011, from 227 to 159 models).
JB: There has been criticism of the confusing and complex sales programmes.
TS: Less choice is part of the solution. We’ve reduced the amount of discount available to the customer. We also have quarterly sales programmes and we intend not to change them once they have been launched.
Look, we lost our way. When you are in a tempest you do anything to survive. This was Renault. Now the time has come to do things in a different way.
JB: How much autonomy do you have to act independently of Paris?
TS: The way to market a product, and decide the price, we have real autonomy over. If I can show Paris that I can sell cars profitably for Renault and the dealers, at the right volumes and with the right brand image I am free to act as I see fit.
JB: You recently toured the dealers, a roadshow with Ian Plummer, director of commercial operations. How important was it that you both went?
TS: We are both newly appointed and we wanted to discover things together since we both had to learn.
It is important for me to meet with dealers at least once a month in their businesses and to spend at least two days per week in the field.
When I visit a dealership I will know within three minutes whether it works or not. So, I can make a conclusion on the kind of contact staff have with each other and customers, whether they smile, how clean the showroom is and the way the cars are presented. Customers do exactly the same.
JB: So, following the roadshow, how viable is the UK network?
TS: It’s more viable than in many other countries. The predominance of large, multi-franchise groups in the UK provides an ability to manage financially if a particular manufacturer is in difficulties.
This brand diversity gives you more power and resilience financially.
JB: How stable is the network?
TS: It numbers around 200 sites now, as it did 12 months ago. We have no plans to change that. The objective is to increase the quality of representation, to ensure we have the standards we want.
JB: But is there any risk of dealers who had invested in Renault and seen the market share fall from 2002 saying they wanted to walk away from the franchise?
TS: No. I’ve met the network and there is a family feeling to it and even if you experience problems it remains. It’s a fantastic asset for Renault and unique.
JB: Many groups invested in the brand based on a much higher market share of 6 – 8% which meant showroom space and workshops for a parc that was much bigger than it is now.
The potential for adequate return on that investment is much reduced. Aftersales absorption in particular is at risk of falling considerably.
TS: The showrooms are not too big in this country for our share of the market. There is potential for a lack of parc in aftersales, so we have to increase customer loyalty during and after the warranty period.
Our action plan acknowledges that we lose too many customers after three years. We will address this through specific customer relationship management programmes launched this year and parts products such as Motrio (a Renault approved brand of cheaper replacement parts suitable for older brand cars and other makes, including a first for a manufacturer, its own brand of tyres, launched in January).
We have less new customers so we must do more with the existing ones. Our product quality problems mean warranty work was so high, finding new service customers was not an obligation. We were busy for the wrong reasons.
JB: How will you work with the network to achieve a more fulfilling relationship with customers with cars outside the three year warranty period?
TS: We will share customer information with the network more. Whenever we have customer contact we will share the learnings. We will share direct marketing programmes. We will contact customers much more. Fixed price servicing is also part of the plan, alongside cheaper parts.
JB: How profitable is the network?
TS: I don’t yet know the average figure for 2010, but it will be positive and better than expected. We are more or less at an average of 0.8 – 1%.
JB: Do you accept there will always be some dealers running at a loss?
TS: We can’t accept that. Under certain circumstances it will happen for one or two years – market conditions or due to a big investment – but it cannot be a consistent factor.
Both Renault and the network have to be profitable and to invest. For example, I am convinced the electric car market will be bigger than anticipated and so investment in sales and service of electric cars must be at its maximum.
Our network must be healthy to be able to take this on. The same applies to the Dacia brand.
JB: One dealer said that consumers had fallen out of love with Renault and that it could take 10 years to fall back in love with the brand.
TS: The priority for us in the last 12 months was to recover market share to 5%. We achieved this through the right balance of channels, across retail, fleet, short-term rental and Motability.
For the next two years we must stabilise our share and build on the brand image, perhaps selling less cars than there is potential for, but at a greater profitability.
After that we will launch electric cars, the Dacia brand and new Clio among other new models to begin to grow our share again from 5% to maybe 6.5%.
JB: How are you going to convince customers to come back this year?
TS: We have to recreate the desirability. We have to get customers to drive our cars because everytime they do they are satisfied.
The What Car? Awards hot hatch category shortlist was entirely Renaultsport cars, the Twingo, Clio and Megane.
We are a sexy brand from a product point of view. We just have to ensure customers know it.
Every week I go to our customer care department and listen to the calls or speak to customers. I send letters two or three times a week to retail customers to establish links with them.
JB: But it is a key concern that if we see another dip in the economy the best laid plans will go out the window. Can you give assurances you will not divert from your goals?
TS: I can. We are sure that with the product and brand plans we can promise consistency. Everyone agrees on the action plan. Everybody.
JB: Are you and Ian here for the long-term?
TS: I have to be here for at least four to five years. Ian and I have to stay to make the difference we need to make and the best way to achieve that is to deliver the results we promise.
A Renault dealer's view:
“Thierry Sybord has been incredibly well received in the few months he has been in the role. But there are some frustrations with the franchise.
“The biggest is that like a lot of the larger dealer groups we have some sizeable sites geared up for a 7-8% market share and an aftersales parc on the back of it.
“The fall in Renault’s market share has left us with oversized sites that we cannot make money out of.
“So, through closing sites, going dual or multifranchise or through moving to smaller premises we have been able to return a profit.
“But we still have the legacy of market share growth and now it’s impossible to get the costbase down to a reasonable level.
“Even though I feel they will be successful in getting marketshare back to 5 or 6% it will take a long time before we have overhead absorption at an acceptable level.
“Now it’s about 50% – and Renault is predicting that because of the nature of the market share reduction the service parc will go down further and absorption likewise.
“An average dealership is making £60,000 out of the franchise.
“We’ve been despondent about the brand because Renault’s marketing has been non-existent or weak for about five years.
"Only last year did we see it look more sensible and now the cars are starting to look more stylish and are more reliable consumers will start to come back to the brand, but it will not happen overnight.
"It could take up to 10 years for people to love Renault again.”
The dealer was also critical of some of Renault’s franchise management.
“You need a degree to understand the service schedule for the different models.
There’s too many variances. Renault should stop going for low ownership costs by having consistent two-year service intervals.
“Sales programmes also lack consistency. Sales managers in the last two years have been fighting to understand the programmes because of their complexity. It felt like a lottery.
“At the beginning of 2010 the marketing plan for the first quarter was changed 17 times in January.
"How can you make an assessment of your profitability when the goals are constantly changing?
“I’m also sceptical about the power Thierry and Ian Plummer have. They have promised to be in post together for three years.
"But Carlos Ghosn has a reputation for running the business like an autocracy and we fear what might happen to their best intentions should we see a quarter where sales don’t meet Paris’s expectations.”