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From the Logan to the Kwid: the Renault's Entry Strategy

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From the Logan to the Kwid: the Renault's Entry Strategy From the Logan to the Kwid: The Renault's Entry strategy Bernard Jullien, Yannick Lung & Christophe Midler 25th GERPISA International Colloquium, ENS Cachan, Paris, 14 June 2017 From the Logan to the Entry Range In 1998, Louis Schweitzer, CEO of Renault, launched the idea of a $/€5000 car (X90 project) In 1999, Renault bought the Romanian carmaker Dacia … Logan’s production begun in Romania (Pitesti) in 2004 Initially designed for CEEC, the car has a great success in European market and in Emerging countries A complete range is progressively developed: Logan (hatchback, MCV, pick-up, and commercial version), Sandero (including Steepway), Duster (Oroch pickup), Lodgy and Dokker Entry , key for Renault internationalization Entry range became central for Renault-Dacia-Samsung group Unit: 000s vehicles Renault-Dacia-Samsung sales in 2016 (passenger cars) Total sales: 2.75 millions Entry & SubEntry: 1.25 millions (45.3%) Source: Atlas Renault 2016 Entry range is at the core of Renault products in emerging countries (except Slovenia and Turkey: in 2017, itsmodels are assembled in 10 different countries, 12 assembly plants on 4 continents 3 Kwid, the Sub Entry segment Carlos Ghosn (CEO) aims in 2010: increase the Alliance Renault-Nissan up to 10% of the world car sales, being more aggressive on emerging markets To propose a modern car to the buyers of new cars A global platform (a set of modules: CMF-A Common Module Family) to derive new models Renault Datsun (Nissan) 4 Renault Kwid and its sister Datsun Redi-GO Starting Price in India: 3670€ Starting Price in India: 3340€ About the methodology A comparative approach based on a double survey carried out by the authors for a decade. › Logan (2007-11): analysis of the documentation (press, internal documents of the group), interviews with the main actors of Renault, Dacia and suppliers (44 people met) and visits to industrial sites in different countries. › Kwid (2014-16) in the same way with three trips to Chennai (State of Tamil Nadu, India) where the car was designed and produced. Some fifty interviews with the key actors of the project were conducted in France or India Principle of "open book: › No financing by Renault › Access to people, plants and documents (including strategic) in return for a visa on the dissemination of information 2012 2017 Agenda of the presentation Understand under what conditions these strategic intuitions could be realized Perceiving more finely how internationalization is managed Indicating that the activation of resources of large companies in innovative directions is possible and promising Challenging the obsessive focus on "start-ups" that structure - both in the car and elsewhere - both managerial credits and policy makers' software today 8 Presentation’s structure I. Short history of the Kwid project in 7 steps II. What to learn from this story? I. Kwid History: An Overview in 7 Steps 1. Upstream exploration 2. Autonomy given to the project 3. Original design organization 4. Sourcing 5. Difficult start of production 6. Commercial launch 7. Internationalization 1. Upstream exploration (April 2010-October 2011) A reasoning on the growth strategy similar to that of 1995 Source L. Feuvray et J.F. Vial Renault The need for a joint Alliance initiative Difficulties on the Indian market for Nissan and Renault products The target: the A segment, less than 3,5 lakhs (5000 euros) Source L. Feuvray et J.F. Vial Renault A shift from Renault previous market positioning The failure of previous Indian hypotheses Renault › Failure of the joint venture with Mahindra & Mahindra to produce the Logan (Mahindra Verito) 2007-2010(>4 meters) › New failure of the joint-venture of Renault with Indian firm Bajaj, manufacturer of motorcycles and leader for 3-wheelers (rickshaw) Nissan › Datsun, a brand for a new Entry range in emerging markets (DO in Russia, GO in India) › Failure of Nissan cooperation with Defiance, an Indian engineering company (Hinduja Group, subsidiary: Ashok Leyland): first I2 project 12 Rethinking Innovation and Design for Emerging Markets “At the start of the project in 2010, the director for pre-projects, the LCI direc- tor, and I met over lunch at the Technocentre’s canteen,” recounts Patrick Le Charpy. T e initial idea proposed by Philippe Klein, the Renault product plan director, was 12 Rethinkingto Innovationuse the Micra and Design as the for base, Emerging and LCI Markets duly worked on this idea for six months. In the beginning, the Design department quickly constructed two small-scale mock-ups, “At the startwith of thedimensions project in extrapolated2010, the director from for the pre-projects, existing vehicles—somewhatthe LCI direc- like a mini-Zoe tor, and I met overand luncha mini-Captur. at the Technocentre’s However, canteen,” they failed recounts to convince. Patrick Le Charpy. T e initial idea proposedAt the by in-house Philippe IndianKlein, the design Renault studio product in planMumbai, director, Ramesh was Gound, one of the to use the Micrathree as thedesigners base, and on LCI the dulyteam worked of Jean-Philippe on this idea Salar,for six workedmonths. Inon a small crossover brief, the beginning,a the “baby Design Duster” department inspired quickly by constructed the Indian two success small-scale of themock-ups, Duster, which had just been with dimensions extrapolated from the existing vehicles—somewhat like a mini-Zoe and a mini-Captur.launched However, in India. they failed Gérard to convince. Detourbet, who saw the sketches in January, 2011, marked At the in-houseit immediately Indian design as thestudio preferred in Mumbai, path. Ramesh T e same Gound, month, one duringof the a project review at the three designersin-house on the team design of Jean-Philippe of ce in Mumbai, Salar, worked Renault on a small Design crossover Director brief, Laurens van den Acker, a “baby Duster”who inspired joined by thethe Indiancompany success in of2009, the Duster,and Patrick which had Le just Charpy been discovered Ramesh launched in India.Gound’s Gérard “green” Detourbet, sketch who saw and the validated sketches in thisJanuary, choice 2011, (see marked Figure 1.3). it immediately as the“We preferred knew path. straight T e same away month, we were during on athe project right review path,” at the recalls Laurens van Den in-house ThedesignAcker. of ce keyinIndeed, Mumbai, LCIrole Renault pursued Design of this Director directionan Laurens integrated by vanmobilizing den Acker, a team of exploratory 15 to 20 peo- approach: LCI who joined the company in 2009, and Patrick Le Charpy discovered Ramesh ple, along with the product and architecture design departments, and no alter- Gound’s and“green” sketch converged and validated this choice (seemock Figure 1.3). -up “We knewnate straight scenarios away we were were developed.on the right path,”With recalls this design, Laurens LCIvan Den believed it had the key to Acker. Indeed,completing LCI pursued the this project direction and by mobilizing to becoming a team an of important,15 to 20 peo- possibly indispensable ple, along withauthority the product on andstimulating architecture new design innovation departments, within and the no group.alter- So it worked toward Upstream Exploration 13 nate scenariosthis were goal: developed. “At LCI, With 70% this design, of our LCI activity believed is itbased had the on key requests to and we make our completing theown Theproject decisions and role to for becoming theof remaining the an important, Cooperative 30%. possibly T is was indispensable the case Innovation for this project. It wasLaboratory (LCI) which gathers authority on stimulating new innovation within the group. So it worked toward this goal: “At LCI,people 70% of our fromactivity is basedthree on requests departments and we make our (Product, Design and Engineering): an own decisions forinside the remaining creative 30%. T is was start-upthe case for this project. spirit It was within Renault Figure 1.3 The “green” sketch by Ramesh Gound, a member of the Renault Design Figure 1.3 The “green” sketch by Ramesh Gound, a member of the Renault Design Studio, Mumbai,Studio, January, Mumbai, 2011. (© January, Renault Design 2011. Studio, (© Renault reprinted Design with Studio,permission.) reprinted with permission.) Figure 1.4 The converged mock-up, June, 2011. (© Renault Design Studio, reprinted with permission.) important for LCI to show it could provide added value by proposing new inno- vations,” says Patrick Le Charpy. From January to July, 2011, LCI worked on the project. T is work culmi- nated in a so-called “converged” mock-up (see Figure 1.4) that incorporated economic and ergonomic constraints. “Our design was, as always, in competi- tion with other more conventional approaches developed at the Technocentre. Tracks that favored rather the internal habitability against the strength and dynamism of the exterior design. But people who knew the Indian market clearly preferred our product vision,” recalls Jean-Philippe Salar—a position that eventually prevailed. T is does not mean that the f nalization of the design was easy. “T ere were conf icts over complying with the economic constraints. For width, Design wanted 1,600 mm, while Project wanted 1,500 mm; for the size of the wheels, Design wanted 14 inches and Project wanted 13 inches,” said Laurens van den Aker. Ultimately, the project won: Gérard Detourbet, former program director of Entry, who worked single-mindedly on this project from July, 2011, but was involved in it right from the beginning, proposed 13-inch wheels, prompting Laurens van den Aker to note: “I have never been asked to use 13-inch wheels before . .” T e agree- ment was as follows: the vehicle was to have 13-inch wheels, but the wheel arch would accommodate 14 inches for markets in which it was mandatory (namely, Brazil).
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