Hutton Reports: Groupe Renault UK

Renault UK boss Vincent Tourette believes Renault is too reliant on fleet and rental and needs more retail sales

This ought to be a story of Renault’s revival, and in some ways it is but it also illustrates the uncertainty that currently surrounds the motor trade in the UK.

In 2002, Renault sold nearly 200,000 cars in this country. Ten years later, sales had dropped 70% and a third of the dealer network was culled.

The crash landing followed an edict from Paris that every model in every market had to be profitable in its own right. That meant deleting the Laguna, Espace, Modus, and a number of niche models and withdrawing from daily rental and other thin margin fleet deals.

In 2013 Ken Ramirez was brought in from Nissan to head the Renault Group in the UK. He activated the GO5+ plan which called, by the end of 2017, for a 5% market share for the Renault group, top tier dealer profitability and top 10 ranking in the JD Power Customer Satisfaction Survey. Sales began to recover, helped by the introduction of the Dacia budget brand.

Ramirez was promoted to European sales and marketing chief in 2016 and was replaced in the UK by Paul Flanagan from Ford. Evidently that didn’t work out, as in April this year it was announced that Vincent Tourette had been appointed managing director of Groupe Renault UK.

Tourette is French but has experience in the UK, having been general manager of Renault London Enfield, part of the Renault Retail Group, and marketing planning manager for the parent company. He returned to England after a posting with Renault’s alliance partner Nissan in Tokyo, where he had global responsibility for LCV sales.

So Tourette, perfectly qualified for the job, inherited an improving situation, which had reached a group volume (including LCVs) of 137,443 in 2016 and a market share of 4.5%.

Then, almost immediately, the market turned and by September, Renault car sales were down 13.9% year-on-year (in a car market down 3.9%). You could say he was unlucky but Tourette understands the cyclical nature of the business and is optimistic about the Renault group’s future in the UK.

“The starting point was the devaluation of the pound. So profits are down. We need a better balance for sustainable business and to align our channel mix. We are still too dependent on expensive sales channels (fleet and  rental) and need a stronger share of private retail sales,” he said.

Currently, Renault’s retail/fleet split is 43/57.

“The UK is a strategic market for Renault. We should be able to maintain a volume of 80,000 for Renault cars and increase sales of Dacia models beyond the 26,000 of the past two years.’

In less than four years since it was launched here, Dacia has achieved a consistent 1% market share. The formula of simple, “shockingly affordable” family cars works well and since there is virtually no overlap with Renault sales, Dacia means incremental business for its 160 dealers.

Tourette said that current constraints are at the dealer level.

“Capacity, space in the dealerships, limits Dacia’s expansion but with new models arriving (a new Duster next year), we need to improve our coverage,” he said.

“We need a few more outlets and we have some open points but we are also working with our partners to support this capacity increase by adapting the way we work, by increasing opening hours and improving efficiency.”

The network is currently being revamped. Evans Halshaw recently unveiled Groupe Renault’s new exterior CI at its Edinburgh West site. The new showroom branding is the next step in Groupe Renault’s corporate identity programme which has already seen 90% of the network embrace the latest Renault Store interior design and is expected to be completed by the end of 2018.

Network revamp aside, what of the higher-margin Renault products? In retrospect, deleting the Laguna and Espace looks like a wise move, as that part of the market has fallen away with the inexorable rise of SUVs and crossovers.

Renault has an attractive offering there. Its smallest SUV, the Captur, was its number one seller in 2016 and vies with the Clio for the top position this year. The C-sector Kadjar crossover is not far behind and the SUV line-up has just been completed by the new Koleos.

The Zoe is second only to the Nissan Leaf in the, admittedly small, pure EV market but Tourette believes that Renault’s pioneering with electric vehicles means that its dealers will be well-placed in the longer term. There are high hopes for its next EV, a version of the Master delivery van which arrives in March.

Despite Tourette’s background and Renault’s shared HQ, there is no talk of a closer association in the UK with alliance partners Nissan and Mitsubishi, and certainly not at a dealer level. Tourette is proud of the Renault network, and the fact that, last year, dealer profitably reached 1.6%, which is the upper tier among mainstream manufacturers.