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‘Nissan’ Megane emerging

Preview: Megane Coupe Concept could herald the new Renault small-car's look.

Renault’s next small car will boast Nissan know-how to match its Japanese pricing

11 Aug 2008

RENAULT’S next Megane will herald a new philosophy for the marque that should see prices that are in line with the mainstream Japanese brands in Australia.

To be unveiled at the Paris motor show in early October, Renault's third-generation small car might even enter our market from as low as $21,000 in today’s money when it is released in 2010 – around the same as a Mazda3 Neo.

This is according to Renault Australia managing director Rudi Koenig, as he prepares for the arrival of the first of his volume products, the Koleos compact SUV.

“Renault is becoming a much more global company, sourcing componentry from all its plants around the world,” he explained.

However, to achieve this new price positioning, the next Megane in Paris won’t be exactly the same as the next Megane slated for Australia under the skin, as Renault leverages its lower-cost brand affiliates Nissan, Dacia and Samsung.

“There is an opportunity for us to establish a ‘European Stream’ of Renault, and a more ‘International Stream’ of Renault products,” Mr Koenig revealed.

“And on some of the new products we will consider whether we will take the International Stream – which will give us a much better value proposition.” Mr Koenig uses the largest segment in Australia – the small-car market – as a prime example.

“The problem we face as European (car distributors) at the moment is that we need to charge a $2000 premium over our Japanese competitors, but to get to the volume part of the market we got to have a pricing position that is in line with the Japanese pricing position. And to do that, we have to be in line with Japanese costs.

“Now the International Stream version – which has got more sharing of Nissan componentry – will give us that opportunity in the future. It’s all about getting the right car at the right pricing point.” Not coincidentally, the Megane III is closely related to the Koleos, which is itself built on the Renault-Nissan Alliance ‘C’ platform that debuted underneath the super-successful (in Europe) Nissan Qashqai/Dualis. It also underpins the Nissan T31 X-Trail.

However, Mr Koenig was quick to point out that any International Stream Renault wearing the Renault badge would be visually indistinguishable from its European Stream brother, and would also share the same DNA in terms of driveability, safety and quality.

It will use cheaper Nissan parts, like engines and gearboxes, as well as electrical modules and mechanical componentry, to introduce simplicity, cut complexity and ultimately contain costs.

Importantly, the International Stream Renaults will also most likely be built in a low-cost country, such as somewhere in Eastern Europe or even Africa, rather than in Western Europe like most locally bound Renaults are.

35 center imageRenault isn’t saying exactly where right now, but countries like Turkey (which already supplies the world with the X84 Megane Sedan) or South Korea (home to Samsung, a subsidiary of Renault and the production source for Koleos, so it’s a strong contender) are thought to be in the running to manufacture the International Stream Megane III.

This fact alone will be one of the single biggest factors in matching the Japanese brands for price and value.

Today’s base X84 Megane Authentique 1.6 hatch retails for $25,490 and is sourced out of Spain, adding considerably to the cost of the car compared to, say, the $21,990 Honda Civic sedan (Thailand), $20,990 Toyota Corolla (Japan) or $20,490 Ford Focus (South Africa).

We also understand that, compared to the European Stream Megane III, the International Stream version will also eschew items that the increasingly sophisticated European ‘C’ segment (small-car class) consumers expect, like keyless starting, adaptive dampers, cornering headlights and automatic radar-guided cruise control.

Volkswagen has already confirmed that its all-new Golf VI due next year will offer some of these items, adding significant complexity and cost to that car the European Stream Megane III may also follow suit, but the International Stream probably won’t.

The next-generation Clio IV from 2012 is also expected to be offered in European and International Stream models, with the latter shaping up to be the one that’s Australian-bound.

However, this does not mean the end of the premium European-built, European-market Renaults coming to Australia.

The mid-sized Laguna, as well as niche products like the Renault Sport Clio and RS Megane, as well as the Megane Coupe-Convertible and Laguna Coupe, are among the models that will retain their upmarket pricing and positioning.

“You still must have image products,” Mr Koenig insists.

“You got to balance this off with prestige products – we don’t want to give that up.” Mr Koenig believes that this two-pronged strategy is the right one for its future volume aspirations in our price-sensitive light and small-car market.

“If we can get the next Megane in for around $21,000 instead of $25,000, and compete against the Corolla and Mazda 3, then we can achieve 200, 300 or even 400 a month against 30 or 30 per month,” he said.

“We’ll never sell 2000 per month like the Toyota or 1000 per month like Nissan, because that takes a lot of time.

“We got to get a car that we can sell at least 200 per month of, so we can build the brand on. And for us the Koleos will be the first of those, and it won’t be the last... and the next Megane will be one of them.” The mid-term aim for Renault Australia is around 7000 units, up from around 3500 annual sales that the company is striving for in 2008.

“The simple economics is for us to sell between 5000 and 7000 cars per year in order to be a viable business,” Mr Koenig said.

“That’s where Peugeot is today, and Volkswagen is well beyond that.” “Koleos should get us close to the 4000 mark. We’re currently competing in around 30 per cent of the market. Koleos should get us over the 40 per cent mark.

“And with the Koleos combined with another volume product – like the Megane – then we are talking of that 5000 to 7000 volume mark being within our reach,” he added.

The new International Stream strategy is one of the cornerstones of Renault’s Commitment 2007 policy that is charged with boosting Renault’s sales by 800,000 units compared to 2005 levels in 2009, as well as achieving a six per cent profit margin and ‘Top 3’ quality position during the same time period, as outlined by president Carlos Ghosn.

“There are a lot of exciting new Renaults starting their model cycle that we can take advantage of,” Mr Koenig said.

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