The Renault Nissan Alliance

Published Date: 02 Nov 2017

Renault-Nissan Alliance is a strategic Franco-Japanese partnership between automobile manufacturers Renault, based in Paris, France and Nissan, based in Yokohama, Japan. Companies in a strategic alliance do not form a new identity to reach their aims but cooperate, while maintaining individual brand identities and independent corporate cultures, in order to develop their respective technologies and commercial networks worldwide. As for sharing good practices, each company constantly benchmarks and draws on the experiences of its partner.

Because of the recession in early 90’s in Japan, Nissan has faced a lack of cross-functional (the design of the cars which was out of touch with the market) and cross-regional (high degree of bureaucracy and the emphasis on engineering culture rather than managerial culture and promotions) problems that lead it to a $ 20 billion debt.

Unlike Nissan which had financial problems, Renault intended to expand internationality (85 % of sales in Western Europe) and to improve the quality and value of products (the main source of Renault’s revenue came from the sales of small and medium size cars in Europe).

The strategic agreement between the two companies was announced on 27 March 1999, in Tokyo. As a result, Renault had purchased 36.8% of Nissan’s capital. The aim of alliance was based on a constructive approach to deliver Win-Win results, preserving each company’s autonomy and respecting their own corporate and brand identities in order to reach the common objectives (quality and value of products and services in each region and market segment, key technologies in engines, electronics and the environment, scale economies, etc.).

On 30 November 2001, the Renault–Nissan Alliance entered a new stage by announcing cross-shareholding and a common structure for management. On 1 March 2002, Renault bought 44.4% of Nissan’s capital, and on 29 May 2002, Nissan increased to 15% its Renault participation. In order to reinforce the synergies of the two carmakers and to improve their performances, new development stage was initiated on 1 June 2009, 10 years after the strategic partnership was signed (the Alliance defines and implements a strategy for sustainable development).

Renault-Nissan merger and acquisition

In 2008, Renault and Nissan’s worldwide sales rose to 5,962 million units, which places the Alliance fifth in the global automotive hierarchy. The Alliance’s commercial brands are Nissan and Infinity for Nissan and Renault, Dacia and Renault Samsung Motors for the Renault Group.

In 2011, the companies, had nearly 350,000 employees and sold about 8 million cars in nearly 200 countries in 2011, behind General Motors and Volkswagen for total volume.

Strategic Management of the Alliance

The Alliance itself has broadened its scope substantially, forming additional partnerships with automakers including Germany's Daimler, China's Dongfeng Motor, and Russia's AvtoVAZ.

Chapter II. Dacia, a controversial brand

II.1. The early days

Currently part of Renault Group, Dacia is a Romanian car which has a recent history, its origins being traced back to 1966, after the visit of Charles de Gaulle in Romania, when the first factory was raised in Colibasi, near Pitesti, Arges Country.

In order to choose under what license to produce Dacia, Romania had to decide between: Renault, Fiat, Peugeot, Alfa Romeo and Austin. After several tests, Nicolae Ceausescu (former Romanian) has decided to produce cars under Renault license. Thus, in 1968, it was signed a license agreement between the French automaker and Romanian State owned company Automobile Pitesti.

Dacia 1100

On August 20th 1968, Dacia 1100, the first French-Romanian car, was already in production. Even thought, Dacia 1100 was based on the Renault 8 model – a model car which was about to be discontinued, became the foundation for the new Romanian brand. Dacia 1100 had rear wheel drive and rear mounted engine (by 1972, 45,000 Dacia 1100 cars had been made).

On August 23rd 1969, Dacia 1300 was showcased at the Bucharest and Paris auto shows. Based on Renaul 12 model, Dacia 1300, became an outstanding achievement of the "beloved leader" and one of the most famous cars in East Europe.

Dacia 1300

In 1970, after Dacia models received minors facelift to the front side, advanced models came about: Dacia 1300L (Luxury) and Dacia 1300LS (Luxury Super) also known as Dacia 1301 and available exclusively for high-ranking politicians. A hatchback called Dacia 1200 is also launched.

Based on the Renault Estafette, in 1975 D6 was the first van ever made in Romania under the Dacia brand. Unfortunately, even though Renault’s model was successful in France, only 842 Dacia D6 were produced in Romania.

II.2. From a licensed product to a national symbol

1978 marks the end of the Dacia-Renault collaboration and, with an expiring Renault license, Dacia continued independently to produce cars derived from Renault range 12 (Curtean, 2009).

Dacia 1310

In 1979, Dacia’s 1300 age came to end and Dacia 1310 has been triumphantly presented at the Bucharest and Eren auto shows. Initially as a concept called Brasov, Dacia 13010 had no less than five base models: Dacia 1310 TLX (1979-1990), LX (1990-1994), L (1994-1990), CL wagon (1994-1999), CLi wagon (2000-2004) and Li (2000-2004). Additionally, a sport version of Dacia was showcased for the first time.

In 1995, Dacia officially announced the first 100% Romanian-made automobile, the Dacia Nova. This time, even though the project was said to be 100% original, the model chosen for "inspiration purposes" was Peugeot 309. Nevertheless, that’s probably the reason why the car, being delayed for so long, looked dated and had no point of attraction whatsoever, failing to make any impression even on the local market.

Dacia Nova

Although, in the socialist period, Dacia owned two assembly lines [one for the Romanian cars and the other for the vehicles destined to international market (the assembly line for exported cars had better endowments and finishes)], Dacia headed to the same direction especially from the quality perspective and therefore it was totally left behind in terms of technology, design innovation and productivity, thus, concepts as "market economy" and "capitalism" stopped Dacia from having a monopoly position.

The competition was already starting to build up for Dacia. Cheap second-hand vehicles were being brought over at an alarming rate, which in turn put incredible pressure on Dacia’s engineers and designers.

5-speed gearbox and Bosh monopoint injection (1893), first 100% Romanian-made car (1895), Dacia’s 1310 diversification: Dacia break, Dacia 1320, Dacia 1325 Liberta (name inspired by the Revolution of 1989) and Dacia 1410 Sport (1985), Dacia 1307 double cabbed pick-up and Dacia 1610 -Volkswagen engine (1992), are incontestable proofs of the modernization attempt of Romanian’s brand.

In 1998, Dacia Nova received a 1.6 litter engine from Bosch with monopoint injection. At the same time, Dacia 1310 CN4 get its last facelift. For a 25 year old model, it was extremely successful and was exported to Germany, Poland, the Czech Republic and Latin America (2 million Dacia’s sold, a respectable figure providing doubtless recognition of one of the strongest local brands).

Constantin Stroe - Dacia’s General Manager, was aware that since 1990, Dacia’s policies were not remodeled substantially, and he begun to search a possible investor, capable of building modern, better cars than what was being produced by Dacia in those times. Discussions with Audi, Peugeot, Fiat, GM, Hyundai and others were opened.

In 1999, after nearly two years lost in endless discussions with Renault, Dacia got real close to being acquired by Peugeot but again the deal failed due to some issues at the government level (Dacia was still a state owned company). Despite of those things, Dacia managed to sign a contract with Hyundai which, although employed only 500 of the over 30,000 Dacia workers for assembling the Accent model at the Pitesti production plant, was enough to reignite Renault’s interest.

For over a year, Renault made preparations and reorganized the company’s management, while getting ready to acquire a 51% stake in Dacia and announce a new automobile.

Over 21 years, during the socialist period, Dacia cars were characterized by a very low accessibility, because of the bureaucracy. Thus, people registered on waiting lists that could last years and once selected, the car could not be exchanged regardless if it was defective (something which happened quite often). Even if Dacia was design to become "the people’s car", not anyone could easily afford and purchase one (at that time, Dacia 1310 cost around 5000-5500 Euro while a "regular" Romanian made about 100-150 Euro/month)

Dacia 1300 together with its derivates was made until July 2004, after being sold over 35 years. A total of nearly two million copies were sold in France, Spain, Turkey, Argentina, Colombia, Chile, Uruguay, Canada, China. "The models derived from Renault 12 there are considered an inspired creation of professionals, evidenced by the production volume and longevity"(The Investor, 2008)

The 1310 is still the most widely recognized and long-lived Dacia model ever. It was sold on foreign markets as well under different names. In the UK it was called Dacia Denem, while the pickup version was named Dacia Shifter and the 1310 wagon was marketed as Dacia Delta. Attemps to brush-up and sell cars from another Romanian brand were made leading to the ARO 10 model being sold later as Dacia Duster.

In 1980, the brand’s management decided that it was high time to bring a new, diminutive car with low consumption, especially designed for the typical Romanian family which had, on average, two children. Dacia Lastun, manufactured at the Timisoara factory, was a revolutionary vehicle aiming to deliver two full sized seats for adults and two minute ones in the rear, for the kids. The project failed miserably, Dacia Lastun did not last long, being discontinued in 1989 after being produced in very few numbers and plagued by countless defects.

 

Chapter III. Dacia under Renault Group ownership

III.1. Privatization agreement

In 1999, Renault Group bought 51% of the Dacia’s shares. But that was just the beginning of the privatization process, so that in present time Renault Group holds 99,43% stake in Dacia.

According to Project Responsible of Renault "From 1999, Dacia’s industrial plant has experienced a totally modernization process, with a five years investment of 489 milions Euro.Upgrades in terms of productions facilities, IT equipment, quality improvement, personnel training, working conditions improvement, premises renovation, and installation of assembly lines for gearboxes and Renault engines."(personal communication, 2011, April 4).

Dacia fully benefits from its membership to the Renault Group, relying on the expertise and organization of the parent company at the industrial and commercial level. The distribution of vehicles and spare parts of Dacia Renault is extended in most countries.

Nevertheless, Dacia is a separate brand within the Renault Group’s brands and is perceived as a low-cost product. The image of Dacia is placed under Renault. Dacia remains a flagship product of Romania in the twentieth century, just like the Trabant fot the East Germany.

When acquiring Dacia, the main objective of Renault was to develop a strategy of producing a new vehicle for emerging markets, raising Dacia’s productivity and overall producing cars of Renault quality under a low price. On long term, the main purpose was to strengthen the brand’s design and the way it was given expression. In addition, Renault wanted to find a way of helping Dacia brand to become mature and more tied to sustainable development (Wood, 2000).

Overall, Renault achieved its purpose and determined Dacia, not only to sell its cars in emerging countries but also in European rich countries. One important factor that stays on basis of Dacia’s success is its corporate brand strategy adopted after the process of acquisition until the present time.

Dacia’s corporate brand strategy

Dacia’s organization

III. 2. Car production and distribution - main entities of Mioveni Industrial Site:

Dacia Vehicles Plant (During its more than fourty years The Assembly Plant ensures both the production of 8 different Dacia range models and of the respective spare parts. The Assembly Plant is organized around four main departments, or shops: The Stamping  Shop, the Carbody Shop, the Painting Shop, and the Assembly Shop. At present, the daily output is 1,366 vehicles a day.  The Assembly Plant employs over 8000 people);

Dacia Mechanical (Power Train) and Chassis Plant (is in charge with manufacturing rough aluminum foundry parts, machining and assembling engines and gear boxes; machining parts; assembling front and rear axles; welding of axles for Dacia’s range models and for Renault models manufactured worldwide. The six departments of the plant are: the Engine Department, the J Gearboxes Department, the TL Gearbox Department, the Aluminium Foundry Department, the Welding and Stamping Department, the Maching-Assembly-Cataphorisis Department. The Powertrain Plant uses the Renault Production System – SPR which contributes to Dacia’s industrial efficiency. The Powertrain Plant employs over 3700 people. The 10 buildings of the Powertrain Plant, covering a total surface of 163,341 m², are all located on the industrial site in Mioveni);

Dacia Central Logistics Direction ensures the link between the Commercial Direction, on the one hand, and the Assembly Plant and the Powertrain Plant, on the other hand. The Direction employs 600 people. Dacia Central Logistics Direction comprises several departments: Industrial programming and planning, Transport parts and vehicles, Renault Industrie Roumanie – International Logistics Network (RIR-ILN). Renault Industrie Roumanie – International Logistics Network was set up in 2005 as an export platform, its mission being to send Dacia parts towards other Renault plants manufacturing vehicles from the X90 family. Initially, the activity of Renault Industrie Roumanie was carried out within the Dacia plant, and then it was reorganized on the new location, that of today, outside the Dacia industrial platform.

Chapter IV. Products, global strategy and innovation

IV. 1. Privatisation products

Owned by the Renault Group, Dacia is not just Europe’s fastest-growing automotive brand, it’s also a global phenomenon, having grown from under 5,000 sales in 2004 to just under 350,000 in 2011.

It’s very interesting how Dacia managed to maintain the same price range for over 35 years (4,800-5,500 Euro). Just as interesting as how the Romanians, the main target of the brand, had wages of about 100-200 Euro up until the year 2000, when things started to move and the national average became 300-400 Euro. It was still very low considering the new Dacia models made under Renault’s guidance will cost between 7,000 and 10,000 Euro while the all-wheel drive versions will easily reach 13-15,000 Euro.

Since it has being acquired until today, Dacia has developed five main models:

1. Dacia SuperNova

Naturally, after the first stept of privatization in 1999, Dacia Nova suffered a facelift, Dacia/Renault present the new Dacia SuperNova, a much improved Nova who now benefitted from a 1.4L MPI (Euro 2) engine provided by Renault and a Clio-borrowed transmission system. SuperNova was produced until 2003 and was a transition model for what Renault planned to do with the Dacia brand.

During the Paris Auto Show, Louis Schweitzer, president of the Renault Group, officially announced the Dacia XC90, a project who soon became known as the "5000 Euro Dacia". Unfortunately, the base model ended up costing 5800 Euro, while the full option variant approached a whopping 10,000 Euro.

Dacia’s utility vehicles were also discontinued in 2006, even though they had been improved over the years as well. And so, the Dacia chapter comes to an end, while the company was getting ready to bring for the the new models, under new leadership and carefully branded "by Renault".

2. Dacia Solenza

Between March 2003 and July 2005 another transition model was manufactured under the name Dacia Solenza. It was essentially a SuperNova with modern design cues, a tidier dashboard, more options and overall more likeable and ergonomic vehicle.

The absolute novelty was the airbag for the driver. It was a first for Dacia and an initial step towards a bit of respect for the brand’s owners. But don’t get it into your head that this respect was given for granted. The airbag was only available on the top of the line model! Additionally, it had electric windows, CD player and air conditioning.

Dacia Logan

3. Logan Project

In the 2000’s, Renault started looking into the possibility of creating a modern robust and reliable car at an entry-level price of 5000 Euro, a cheap car that would be affordable for the majority of people. This was the beginning of Logan Project, part of the international development strategy of the Renault Group, which were to produce annually more than 700,000 units of this model until 2010.

Logan was a pilot program for the use of new numerical technologies in the conception of the product, the tools and the manufacturing process. It was developed as part of the Project X90 in which digital simulation technology was used and engineer the vehicle and manufacturing tools in order to decide the production process. Logan was a decisive step of the Design Cost Program, introduced by Renault in 1992.

Dacia Logan was built on the same platform as Renault’s Clio and Modus and Nissan’s Micra. Another key factor in reaching the cost targets set for Logan was the choice of a front suspension similar to that used by Clio, with no anti-roll bar, and rear suspension taken from the Renault-Nissan Alliance’s B platform.

The Logan car, completely of Renault origin (technology, development, rolling chassis, engine, gearbox, etc.), was conceived in the Renault Technocenter near Paris and meets the Renault manufacturing standards. Its modern conception corresponds to international standards, notably to the standards of the European Union, concerning safety, gas and noise emissions and recycling of materials.

Renault had put all its know-how to the service of the Logan Project in order to calculate vibrations and test acoustics on digital models that helped designers to predict noise levels in the vehicle without using a physical models. The advantage of the digital method, especially in defining and developing the body structure, is that costly prototypes of vehicles and tooling do not have to be built so many physical stages in the design process are eliminated. The total cost saving was estimated at about 20 million Euro.

Logan Sedan, the first car in Dacia’s history was awarded the 2004 Autobest car by journalists from 11 countries in Europe. It was tested by the EuroNCAP in 2005 and received a 3 out of 5 stars rating.

4. Dacia Sandero

In 2007, the Dacia Sandero was rolled, a small 5-door hatchback designed to cost at most 9,500 Euro for the top of the line version. Dacia Sandero was being sold first on Brazilian and Argentinian markets, and in 2008 on European markets (including Romania). Since 2007, all Logan models are Euro 4 compliant and are scheduled to switch to Euro 5 in 2010-2011.

Dacia was selling better than even Renault had hoped and more and more manufacturers start thinking about creating cheaper cars, for a market segment they did not believe was so vast. The interior is similar to Logan, but has some modifications to improve comfort and security. Sandero was the smallest Dacia vehicle and the fifth version built on the Logan platform.

According to some press releases, in 2008, Dacia launched the LPG version of sander in Italy, in 2009, the LPG engine was launched also in France and in Europe the D4F engine on Logan and Sandero. At the end of 2009, France and Sweden began selling E85-compatibles vehicles. To be more specific Dacia Logan MCV K4M was sold in both countries and Sandero K7M only in Sweden.

5. Dacia Duster

In 2010, the Dacia Duster comes into play. The first Dacia SUV ever to exist. A tad shorter than the Logan but with a generous ground clearance and optional all-wheel drive, Dacia Duster drove the foreign markets mad. Based on the same platform as the Logan, Duster revived a name previously used by Romanians to sell ARO 10 cars in the UK. If you remember, in the 90s, there was an attempt to market the ARO10 as Dacia Duster.

Dacia Duster

Even if Dacia Duster doesn’t impress with luxurious features, doesn’t offer exceptional comfort, is not a stable or very safe car, and yet it sells better than any other SUV in its price range. A range that’s not at all modest. An all-wheel drive Duster starts at 12,500 Euro and can reach 16,000 Euro.

According to Constantin Stroe’s declaration in the press in January 2010 – vice-president of Dacia, "Dacia has had a decent start in 2010. Were we to judge based on what was happening on the local market, in January we should have been working just 7 and a half-hours per day. And yet, we managed to export 22,000 cars and now we’re counting on the Duster to help us get through this year of financial crisis". Duster sales have surpassed even the most optimistic predictions of Renault’s management and continue to be on the rise. "The Duster has just been launched on the market. Still, demand is now 2-3 times larger than our greatest expectations. Out of every 10 cars built, one is sold in Romania, the other 9 are exported".

After only 8 months, in August 2010, Costantin Stroe said:"We have a very well defined strategy in place until 2015. Dacia-Renault has absolutely everything it needs to build automobiles. Only one thing worries me. If the wages increase trend gets out of hand nationwide, Dacia will lose some of its appeal. For the last 20 years, the automotive industry has migrated from West to East."

The New Dacia Duster really is a step into the future for this rapidly growing brand. Its a car designed and developed to really push the barriers of technology, while at the same time offer a stylish alternative to those buyers who previously might not have considered a car from this marque.

In 2011, Duster won several awards in Europe: 2011 4x4 of the Year – 4x4 magazine (France), 2011 4x4 of the Year – L’Automobile magazine (France), 2011 Car of the Year – Croatia, 2011 Winner of "Autobest 2011" (Germany), "2011 Trophée de l’Argus" (France), „Wertmeister 2011"(Germany) (Smart Motorist, 2011).

German customers voted Dacia their second favorite manufacturer in the J.D. Power Customer Satisfaction Survey, in 2010, just behind Audi and ahead of Mercedes-Benz.

All these awards are further proofs of the global Duster phenomenon, a car built at the plants in Pitesti (Romania), Moscow (Russia), Curitiba (Brazil) and Envigado (Colombia) as well as at the Renault-Nissan Alliance site in Chennai (India).

The key of Duster success is: space and quality, at an unbelievable price. Staff preparation has also been a key, sale staff has been exhaustively trained on every aspect of this new car so that they’re ready for any conceivable question. Dacia, also come up with some finance package, suiting both private and business buyers.

IV.2. Dacia Duster in UK - slogans of Dacia: "shockingly affordable" and "a new car for second-hand price"

Known for offering reliable, practical and spacious vehicles, three months before it even launches in the UK and after stunning the industry with its "shockingly affordable" Duster prices, the Dacia brand won Car of the Year awards, including the overall title, for its Duster SUV (The Sunday Telegraph, 2012).

Thierry Sybord, Managing Director, Renault UK, said: "We've watched our European neighbors’ sell tens of thousands of Dacia’s to happy customers over the last few years and are now delighted to be bringing the brand and its "shockingly affordable" models to our shores. We're over the moon to be collecting these three awards, our first for the brand in the UK, including Scottish Car of the Year, even before it officially launches in January".

Standard features, depending on specification, range from air con to alloy rims while Dacia in the UK reckons the Duster’s sizable boot and cabin area will also attract families. The mini-SUV’s proven abilities in countries such as Brazil, Columbia, India and Russia are seen as an indicator of its ruggedness. Dacia UK's marketing director Phil York said of the brand’s early UK success: "Our Duster flagship is off to a great start even before we’ve received our first right-hand-drive shipment."

From a local brand that indulged in sweet monopoly for over 30 years, the Dacia brand has become a genuine global success story. In 2010, 350,000 people bought a new Dacia in 35 countries worldwide, making us the fifth-bestselling passenger car brand in France (in 2011), as well as market leader in Romania and Morocco.

IV.3. Renault Group Global Strategy

"Over the last decade, we used the Alliance to develop win-win synergies between Renault

and Nissan, and that approach worked well when both were profitable and growing" says

Carlos Ghosn, Chairman and CEO of the Renault-Nissan Alliance. "Today, we have to move

faster. Seeking synergies is no longer optional, but mandatory. We have assigned a group of

experts to focus on building greater synergies to get us through the crisis and position us

competitively for the future." (Press release, 2009).

Since 1999, Renault and Nissan have achieved and developed an alliance that has created significant value for the two companies. The achievements include shared platforms and powertrains, cooperation on advanced technologies, standardization of manufacturing methods, the expansion of the product line-ups and the extension of the global footprint of each partner.

Alliance’s synergies

Results of Alliance cooperation

The Renault-Nissan Alliance is going beyond platform-sharing by adopting a new approach called Common Module Family (CMF). CMF aims to double common parts and components in future Renault and Nissan ranges. By sharing the technical architecture among a wide variety of models, the Alliance is maximizing scale and reducing the development cost of new vehicles.

The CMF is based on the "4+1 Big Modules" concept. The four modules – engine compartment, cockpit, front underbody and rear underbody– as well as the architecture for electrical and electronic components (+1), are designed to be combined in a variety of vehicles – compacts, sedans or SUVs – of the Renault and Nissan ranges. Between 2014 and 2016, 80% of the Alliance’s model launches will be based on a platform shared with a partner and will use standardization of parts through modules (Renault-Nissan Alliance Team, 2012).

The Alliance has been a tool for better performance, based on the trust and confidence

gained through 10 years of working together. Accelerating synergies and supporting them with

a dedicated organization will help both companies weather the current crisis and emerge as

stronger and more competitive global companies.

Combined vehicle sales have increased from 4.9 million units in 1999 to more than 8.03 million units in 2011 (including Sales AvtoVAZ), making the Renault-Nissan Alliance the world’s third largest automotive group.

Renault 2016 – Drive the Change is founded on Renault’s ambition to make sustainable mobility accessible to all, expressed in the brand tagline, "Drive the Change". This strategic plan covers a six-year period with a mid-term review at the end of 2013. This will allow us to build a long-term strategic outlook to ensure continuity in operations and to establish precise, quantified priorities for the three years to come.

Renault 2016 – Drive the Change has been built to meet two objectives:

ensure the Group’s growth,

to generate free cash flow on a lasting basis, with the following aims for the 2011-2013 period: sales of over 3 million vehicles in 2013 and at least €2 billion in aggregate free cash flow.

The Renault group will work on seven key levers to meet these objectives: pursue the innovation policy, strengthen the product offer, reinforce the image of the Renault brand, ensure the excellence of the distribution network in customer relations, control investment and R&D expenditure, reduce costs and maintain positions in Europe and pursue growth internationally.

Renault’s statement says that its investments in Europe will concentrate on ‘high value added products, primarily mid- and upper-range vehicles, light commercial vehicles, electric vehicles and motors and batteries’

According to the Renault’s own figures, European new car sales in 2010 were still 20 per cent lower than the 2007 peak. It predicts that the European market will not return to the 2007 level until 2016.

By contrast, Renault says sales in the BRIC area (Brazil, Russia, India and China) have increased four-fold in the past ten years and now account for one-third of car sales worldwide. Non-European new car sales are expected to expand by 50% between 2010 and 2016.

Renault was long criticized by analysts for relying too heavily on the European market. The company now says ‘sales outside Europe now account for 37 per cent of total sales, compared with 17 per cent in 2000, and in 2011 the proportion is expected to rise to 43 per cent. Renault will continue to invest abroad, in particular in Brazil, India and Russia (de integrat USA).

IV.4. Dacia’s strategy

On the other hand, Dacia’s Strategy (Bulletin of Transilvania, 2011) is based on:

market strategy of Dacia is considering expansion into new markets and for new segments of consumers. In order to achieve this objective, it has proposed using a strategy of continuous renewal and diversification of its products. Also, in order to extend its market and increase market share, the company has established a strategy of low prices, which should reflect, at the same time, an appropriate price-quality ratio.

pricing strategy aimed to maintain the price level of Dacia models as low as possible. All advances in productivity that have passed the products were made and transferred to the benefit of the customer. Dacia was also involved in the Remat Program and announced a financial package to help customers who want to buy a Dacia car. Thought this Program, Dacia has consolidated its leading position in Romania, even in the current difficult context. Over the past two years, Dacia has been the car brand with the fastest growth in Western Europe, even if, initially, the cars that produced at Pitesti were rather dedicated to emerging markets around the world, not to developed ones.

environmental strategy of Dacia meets the principles of sustainable development strategy of Renault. It aims to maintain ecological balance, reduce the impact of company activities on the environment and enhance compliance with the environmental imperatives regarding the lifetime of the vehicle from the design phase until the end stage of use. The car production is done in compliance with ISO 9001 quality management and ISO 14001 for environmental protection. Eco 2 signature is a certification of the fact that Dacia fall in the long-term environmental strategy launched by Renault in 2006.

IV.5. After Dacia Duster in UK, The Alliance offers limitless potential to Duster concept

The Roumanian automotive market is now considered "mature" because in just a few years, Renault turned the ailing company into a driving force for the Group. Romania is now a key component in the Group’s strategy of international expansion.

Because scope of Renault-Nissan Alliance remains open and flexible, the Alliance has generated a wide spectrum of projects and initiatives. Trough the Alliance, the partners develop strategies and are share perspectives on major industry issues and opportunities, offering each other support and market knowledge for the news market segment.

Nissan contributes its expertise in SUVs while Renault shares its expertise in diesel engines. Renault and Nissan rely on each other to increase share in new markets when one of the two Groups is already present (China, Brasilia, etc.).

The Alliance gives the chance to refine a fundamental component of the car making craft. Across functions and borders, our engineers are inspiring each other to devise the vehicles of the future.

The Group chose this brand strategy for Dacia’s cars because on those markets it owns a better reputation than its acquired company. Dacia’s cars were pulled off from those markets some decades ago because of quality issues and thus the effort of convincing people that the cars evolved into more safe and qualitative ones would have been huge, as much as the risk of failure. Using just Renault’s image offered customers a clearer visibility of what Logan and its subsequent models wanted to suggest – a car of Renault quality but with minimum comfort features on a very low price (Olins, 1990).

According to the numbers registered in 2009 this brand strategy had almost the same success as the endorsing brand strategy adopted for European markets: there were approximately 600,000 cars sold under Dacia (by Renault) brand comparing to around 500,000 cars sold under Renault brand.

One core benefit of the Alliance is the capacity to carry out in-depth benchmarking that would not be possible with a third party. Nissan and Renault’s joint transparency policy encourages such disclosures, giving us the advantage of a dual angle on problems and their potential solutions.

Further optimization of the Alliance in areas such as distribution and shared production capacity lowers cost and risk-factors that will help expand faster in the largely untapped General Overseas Markets (GOM).

IV. 6. Renault Duster SUV – Made In India And Exported Globally

"We will need more products and it would be across segments. We are very interested in the SUV segment and have many options globally. Duster has done very well in India and a vehicle based on it is definitely a prospect. We will look into that possibility (of borrowing it from Renault)," Takayuki Ishida, MD and CEO, Nissan India, said.

Renault has not been able to establish itself as a potential brand in India and therefore it has a number of plans in mind which eventually put him in the race among the leaders in the automobile market. The French manufacturer is planning to launch the Renault Modus small car and the entry level sedan Renault Symbol in India during 2012 and will unveil the Renault Duster SUV globally around 2012 mid.

Since Dacia did not own a good equity in Eurasia, Asia-Africa and America, selling the cars under a more prestigious organization identity like Renault’s (Ettenson & Knowles, 2006) opened the gates to a great success. The Group chose to market Dacia’s cars under its own name and visual identity (Basu, 2006). For instance, Logan was sold under Renault brand and identity in approximately 30 countries, including Colombia, Venezuela, Russia, Ecuador, Argentina, Brazil (as Logan Renault), Iran (as Tondar Renault) (Renault Group, 2009).

Moreover the concentration of the brands on some markets allows the achievement of critical mass for reaching scale economies (Chailan, 2008). Dacia benefits from manufacturing cost savings because all there models are built on the Logan platform. Moreover the company also takes advantage of marketing and distribution synergies because all three models are sold in approximately the same countries. Last but not least, allows optimizing the market placement in terms of technological innovations.

The essence of a truly global brand should be represented by its core values and the ability of transmitting them across the world (Wright & Nancarrow, 1999). The branding strategy applied on a local market is more likely to succeed if it is supported by a consistent and clear global brand vision. From a global perspective, the branding strategy implies local markets convergence towards a common global brand platform which reflects the brand values and vision (Tarnovskaya, Elg & Burt, 2008). The global brands can be produced in more than one location so that the company can access easier foreign markets with lower costs (Pecotich & Ward, 2007).

The latest news concerned with the much awaited Renault Duster says that the company will follow the same strategy which is currently being followed by Nissan. Nissan launched in the past Nissan Aprio and a while back Nissan Micra which did not do well in the market but to overcome those losses, the company has started exporting the same car to other markets. For the same purpose it has been exploiting the Orgadam facility, near Chennai to its limits and we will probably see the same strategy being followed by Renault for the Duster.

Eventually Renault will make India as its export hub and will start exporting the Duster in right hand drive markets such as UK, with a Dacia badge (The SUV is known as Dacia Duster globally where Dacia is a subsidiary of Renault).

Due for its launch by mid-2012 the car will be powered by a 1.5 Litre CRDi dCI diesel motor which will produce 105 BHP of max power and 240 Nm of max torque. Apart with this a MPFI petrol engine will also be offered which will be a 1.6 Litre unit producing 105 BHP of max power and peak torque of 148 Nm. Being an SUV, the car will be offered in both 4×4 all wheel drive and 4×2 drive options and is expected to be priced near Rs. 8.5 lakh.

The list of competitors include some of the most successful cars like the Mahindra Scorpio and Tata Safari. If priced right and offered with good feature the car will surely become the next highest selling SUV in its segment so all we have to do is wait and watch.

IV.7. Innovation

Collaborative Innovation have been an integral part of the Group’s corporate culture for many years. This process involves:

creating conditions that build motivation so that employees are encouraged to take initiatives, and to invent and implement new solutions;

encouraging recognition of performance in the areas of initiative, creativity and accountability.

Innovation for safety

Because accidents cannot always be prevented, Renault Group equips its cars with protection systems for passengers of all ages and sizes, whatever their position in the vehicle. Several systems work together to avoid any loss of vehicle control in emergy situations. Renault engineers design high-tech equipment to prevent risky situation, by alerting the driver and making driving easier.

Did you know?

Today’s airbags inflate in 30 thousandths of a second and reduce the risk of serious head injury by 75%;

Roll bars protect cabriolet passengers by deploying automatically in the event of a rollover;

The Isofix anchor point system developed by Renault provides optimum protection for the children under 10 in impact situation;

Rear passengers are protected by an adapted seatbelt;

Third-Generation Renault System for Restraint and Protection (SRP3) adapts the way the protection equipment reacts;

Emergency Brake Assist (EBA) combined with Anti-Blocking System (ABS) helps control vehicle trajectory whatever the braking intensity;

Xenon and bi-xenon headlights increased visibility to more than 100 meters.

Innovation for the environment protection

Renault Group has progressively implement the methodologies, tools and management standards and reducing the environmental impact according to ISO 14001 in order to:

Reduce consumption of energy is equivalent to reducing greenhouse gas emissions trought two future solutions: electric vehicles in the medium-term and fuel-cell vehicles in the longer term;

Reduce fuel consumption and cost.

Innovation for technology

Electric vehicle;

Renault performance is based on an extremely broad range of powertrain components, constantly upgraded and rounded out with the most recent creations.

Conclusion:

Renault is now ready to implement more global centric regionalized business units that are connected by synergistic output and productivity performances with terms of quality, technology and profitability that equal if not surpass the major global car manufacturers. Renault applied an integrated productive strategy based on the Just-in-Time approach that imposed the implementation of total quality management and the enhancement of competitiveness to the level of international standards, particularly in the cases of Samsung and Dacia.

During time, Dacia accumulated and remained only with – Logan, Sandero and Duster – a group of brands that consists in a permanent source of sustainable competitive advantage (Chailan, 2008). They offer the best price – quality report.

Since the Dacia brand was present across multiple country markets across the three major industrialized continents (North America, Europe, and Asia) on a first side it could be said that it was a global brand (Townsend, Yeniyurt, & Talay, 2009).

Trough Renault-Nissan Alliance, Renault escaped from its European Fortress and established itself as the fifth largest car manufacture in the world. This world ranking enabled Renault’s innovative and creative departments to develop, in concert with Nissan cutting-edge technologists, engineers and designers, more efficient and alternative fuel driven vehicles that will differentiate and localize productions and models in accordance to local demands and regional market needs.