PARIS - Renault plans to establish at least one second brand and possibly others to market inexpensive cars in developing countries.
The strategy could involve cooperation with another international carmaker or multiple local partners, said Georges Douin, executive vice president for product planning and international operations.
Romanian carmaker Dacia could provide the first emerging market cars for Renault. Renault is the leading candidate to acquire Dacia, which the Romanian government has decided to privatize as early as next year.
Douin said Renault's global strategy largely depends on second brands in Asia and other regions where its presence has been limited.
He said Renault does not exclude cooperation with a Japanese manufacturer.
'They do not consider Renault as they did 10 or 20 years ago,' he said. 'They are less self-assured and more open-minded now.'
Renault is considering two product strategies for emerging markets.
'We could design a new car ourselves - we have a team working on this - or rebadge an existing one,' Douin said.
Renault aims to double annual production to 4 million units by 2010, with most of the growth coming from outside Europe.
Renault aims to expand in three main regions: South America, eastern Europe and Asia. It will compete both with current models like the Clio, Megane and Scenic and with secondary brands.
Renault produced 1.9 million cars and trucks in 1997, and expects to make 2.2 million units this year - thanks largely to a 16 percent rise in its west European car sales in the eight months to August. But in the long term, Renault Chairman Louis Schweitzer believes Europe, the USA and Japan, are slow-growth markets.
'Our strategy is pointed towards new, non-traditional markets,' said Schweitzer in June. 'That demands we build an industrial presence in those markets. We are not yet sufficiently international outside Europe.'
He wants to raise Renault's global market share from 3.6 percent now to 4 percent in 2003 and 5 percent in 2010.
Manuel Gomez, Renault vice-president for international operations, said 'a well-balanced sales split in around 2003-2005' could be: 50 percent in western Europe; 15 percent in central, eastern Europe and CIS (ex-USSR); 10 to 12 percent in Asia; 10 to 12 percent in South America; 8 percent in Turkey and the Middle East; 5 percent in Africa and the French overseas territories.
In 1997, western Europe accounted for 83 percent of Renault car and light commercial vehicle sales. Eastern Europe and Turkey took 8.6 percent; South America 6 percent; and Asia 0.3 percent.
'Apart from Turkey and Russia, we are prospecting in Asia, we are looking very closely at South Africa and we are studying if a comeback is possible in Mexico,' said Gomez.
With the pending privatization of Dacia, Romania is the top priority. Dacia produces about 90,000 Renault R12-based cars a year in different bodies - a two-box, three-box, wagon and pickup.
'Dacia could be the opportunity for a second brand aimed at emerging countries,' said Gomez. 'Its current cars are worth $3,000 to $4,000. It is part of eastern Europe. It's not very far from Turkey where Renault is also making the R12. And 30 percent of Dacia managers speak French.'
Asia is more complex because Renault lacks a base there. The company built 1,689 units (mainly Trafic and Express vans) in China, Taiwan and Malaysia in cooperation with local partners last year.
In China Renault has had talks with Beijing Automotive Industry Corp. about building two local versions of the Scenic minivan, a people-mover and a goods-mover. Production capacity could reach 30,000 units.
In Taiwan, Gomez said Renault was discussing with the firm Formosa Plastics proposals for making a hybrid-powered vehicle based on an existing model. That model could be the Kangoo light commercial van.
In Malaysia, Renault is waiting for its venture with Inokom to resume production of Trafic-based Permas commercial vans. Production was frozen by the economic crisis.
Gomez added: 'We are interested in Thailand and the Philippines because we think these countries will recover faster.'