Renault has a double reason to celebrate 1998. It is its centenary year, and will probably be a record year for sales and profits as well. During the first six months of 1998, Renault sales grew by 21 percent to FF121 billion ($22 billion). Profits increased 2.6 times to FF4.4 billion. Now Chairman Louis Schweitzer, whose strategy is based on 'profitable growth,' is making significant efforts to increase Renault's presence in markets outside Europe.Does Renault need a second brand to enter new markets?
There are clearly two quite different markets for us in the world. One is for European-type cars. We should not compromise on these cars in new countries. A new Renault must be the same all over the world. It should be launched within six months in every country.
But many customers cannot afford these cars. This is where a second brand comes in. It would not be a brand for the Western European market, but rather a modern, durable car costing $6,000. The question is: can we make a modern car for the same price as a Maruti or a Lada? We are working on this, but we are at an early stage.
Could Dacia solve this problem for you?
If we get involved with (Romanian state-owned carmaker) Dacia, there is the question of the product range. At some point, Dacia will have a new product line. If this new product is 50 percent more expensive, Dacia customers will not buy it. The car has to be different in regions such as Eastern Europe or Russia and India.
Could you have a partner in Asia for this kind of activity?
We want to have a much greater presence in Asia. The question of speeding up our plans by cooperating with Asian players is still open. We are not focusing on a particular country at this stage.
Do you expect continued growth in Europe?
My belief is that the British market has peaked, that Italy will decrease, but the rest of Europe will grow. But the downturn in a market after the end of a government incentive program is very difficult to predict. In France, the downturn was worse than expected. People got accustomed to lower prices. I think the incentive program contributed to the general change in pricing policy.
Renault is expected to sell about 2.2 million vehicles this year, passing the 2 million level for the first time since 1992. Are you expecting the same growth trend next year?
This year, Renault has increased its share of almost every market in Europe, including France. Renault is the No. 1 passenger car and commercial vehicle brand this year in Western Europe. This is for the first time since the early 1980s. Volkswagen, GM and Ford have been in a product change cycle - although we have too, with the Clio. On the whole, I think it will be difficult to improve market share in 1999 as much as in 1998.
Has the Scenic peaked?
The new competitors are coming in rather slowly. I consider the Fiat Multipla rather a niche vehicle. The Opel Zafira will appear next Spring. The Citroen Picasso, which is clearly a competitor, will come in late 1999. It leaves some space for us.
Where are the Scenic buyers coming from?
A large number of buyers come from the Golf class. A lot of people are trading down from larger vehicles. The Scenic has clearly created a brand awareness by itself, but the public also sees it as part of the Megane family.
The Scenic 4x4, launched in next year, will give the Scenic concept more independence.
To our surprise, the Scenic - which is a family-car concept - has appealed to non-family buyers, in Italy for instance.
How is Renault's joint venture in Russia progressing?
It is moving along. At the Moscow show, Russian dealers were saying business had slowed down by about 30 percent, but people are still buying cars. Our semi-knocked-down operation should start to make Meganes in Moscow by the end of the year.
Could your cooperation with GM Europe be extended? (Renault and GM have worked together on commercial vehicles in Europe.)
An extension would be a bit unbalanced since GM is slightly larger than we are! GM will start selling its own version of the new (Renault) Master commercial van next year. We have found that there is potential outside Europe for the two vehicles (the Master and the future new Trafic van) that will be co-developed with GM.
What about a passenger minivan partnership?
You can never say never. We could not develop a new commercial van profitably without a partner. With minivans, we think we can develop a successor to the Espace on a Renault platform.
Is distribution the last area for improvement in the car industry?
Our target is to manufacture and deliver a car within 15 days by 2001. But we can reduce distribution costs. Our FF20 billion cost-cutting program includes distribution. The networks can improve their efficiency. We are increasing our dealership territories. In France and across Europe, dealer groups are growing.
What is the future of the Renault VI truck division?
The truck business has no reason to be less profitable than the car business. Renault VI still has a lot of progress to make, in marketing for instance. At this stage this work can be done within the Renault group.
Louis Schweitzer was interviewed in Boulogne-Billancourt, Renault's headquarters near Paris, by Automotive News Europe editor Richard
Johnson and staff reporter Stephane Farhi.