Bernard Hanon was the architect of Renault's revolutionary product strategy in the 1970s and 1980s. The strategy turned Renault into a full-line automaker, but the company piled up debt in the process.
Born in 1932, Hanon graduated with an MBA and a doctorate in economics from Columbia University in New York City. He joined Renault Inc. in 1959 in New York before becoming a professor in management at New York University. In 1966 he returned to France, where he organized Renault's product strategy and set up the marketing and product planning departments.
In 1976, Bernard Vernier-Palliez appointed Hanon deputy general manager in charge of the car division. Hanon helped Vernier-Palliez with Renault's return to the USA through the acquisition of Mack Trucks and American Motors Corp. in 1977 and 1978. Inside Renault, he was nicknamed 'the American.'
In late 1981, Hanon succeeded Vernier-Palliez as chairman. In 1983, he launched production of the Espace minivan designed by Matra. He was dismissed by the French government in early 1985 after Renault had lost FF12.5 billion ($2 billion) the previous year and had amassed FF57 billion ($9.1 billion) in debts. He was replaced by Georges Besse.
Hanon now manages his own consultant firm in Paris.
Q: How did you start with Renault?
A: I joined in 1959. I was completing my doctorate at Columbia University in New York, but I already had automobiles in my blood. Renault Inc. was looking for somebody to take charge of market research. At the time the Dauphine was still in its glory days.
Very quickly, I came into conflict with the local management about the future of Renault in the USA. A dangerous process was underway with technical and dealer network problems with the Dauphine.
In 1961 Pierre Dreyfus sent a new team to the USA, more realistic people. We tried to limit the damage, but the Dauphine did not fit the American market. Sales dropped from 100,000 to 25,000 units per year.
I left Renault and became a professor in management science with New York University. My topics were operations research, games theory and decision theory. In 1966, Dreyfus asked me to take charge of product planning and market research in Paris.
We created a real marketing department which performed market research, statistical research and studies about customers' behavior. I hired mathematicians to work out specific economic models for the auto industry.
Q: When did Renault start to have a real product range, not just one car like the 4CV or the R4?
A: The R16 (introduced in 1965) was a first step. But we really started thinking of a range for Europe in 1967-1968. Previously, Renault had been among the first carmakers to set up a European sales network.
The range included the R4, R8, R16, then the R6 and the R12. The big influence regarding the concept of product range was General Motors' Alfred Sloan.
Q: The big innovation in the early 1970s was the R5.
A: The R5 stands outside traditional classification. It's a small car, a first car for some people, a second car for others. It's a multi-purpose vehicle, cheap to buy and cheap to maintain. But it must not be considered a lower-range car. A man could drive it, but a woman could as well and she should enjoy it. The car also had to avoid a forbidding look.
So, against Renault's tradition, I proposed a three-door car. The engineering department backed me because we were targeting the lowest-cost price. Simultaneously, we wanted a car with a friendly face.
Q: The R5 was introduced just before the first oil crisis. How did Renault face up to the difficulties?
A: There were different positions inside the company. Some people thought Renault should diversify outside the car business. I thought that the shock had to be absorbed but that we had to be cautious in our move to the upper range. As a result, the top-of-the-range models were given up.
However, we had tightened capital expenditures. We reached 1980 with an aging product range, which led to Renault's crisis. Therefore, we had to get into debt in order to renew the product range quickly. We had to prepare the Super 5, the R25, the R21 and the R19 (introduced between 1984 and 1988).
To survive, we had to introduce one new model every year. But the retail prices were blocked and the costs were too high. And we did not know yet how to make quality products for a reasonable price, as the Japanese did.
Q: What was your part in AMC's takeover?
A: I was one of the negotiators in the 1978 deal. The key issue was to have a dealer network. AMC had a network that was not perfect, but it had a strong brand, Jeep.
There was no other choice. We had already talked with Chrysler. We knew it would take 10 years to do something.
We did the Premier, which maybe was not the most clever thing we did, but the dealers were clamoring for a sedan. AMC was sold to Chrysler just 10 years later. Today, the Jeep brand is worth a fortune.