Stratégies génériques (document en anglais)

Generic strategies

I. Cost strategy

Since its alliance with Nissan, Renault developed a lot its cost strategy. In this way, the company gained more competitiveness and ensured more economical and financial growth than if it were acting alone.

First of all, the union allows Renault-Nissan to produce with lower costs since they share resources to develop engines and platforms. Moreover, its partnership with Daimler reinforces the share of drivetrains, procurement costs...

Another point is the migration of the company's production away from France. Actually, the high labour costs differences between France and emerging countries drove Renault-Nissan to settle its production abroad (more than 80% of Renault-Nissan cars are produced in emerging countries). The group opened plants in Latin America, Romania, South Korea, India, Morocco... This strategy represents many savings. For example, producing a car in France, including wages and payroll taxes, costs €1,000 more than in Romania. A French worker earns an hourly wage of €34 whereas in Eastern Europe the same worker receives one third of that. The difference is still meaningful in Morocco where the group has an assembly plant where workers receive less than €4 an hour. Taking into consideration the thousands of cars produced each year by Renault-Nissan, this strategy proves to be efficient.

Moreover, Renault-Nissan strategy to implement in emerging countries not also drives to a reduction of production costs but also to a reduction of transport costs for certain models. For example, the Logan car is mainly produced in the emerging countries it is going to be commercialised in (this point will be developed more widely in the niche differentiation part).

A last cost strategy we can talk about is its R&D location. The group concentrates the majority of its R&D in France. In this manner, the costs arising from the geographical distribution of the activities are reduced (e.g. setting up operations or costs of control). However, to meet the requirements generated by its international expansion, it now gives decentralised innovation entities more autonomy, especially regarding the adaptation of vehicles to the specific needs of local markets.

Currently, the Logan car is the best example of Renault’s low-cost strategy but Renault-Nissan Chief Executive, Carlos Ghosn is still on the race to build really cheap cars. He is betting that for autos, the magic number is under $3,000. He already talked about his new challenge at a plan-opening ceremony in India: a model with a sticker price as low as $2,500 (about 40% less than the least expansive subcompact currently on the market)… To be continued.

II. Differentiation strategy

Renault's slogan "Drive the change" reveals its efforts on differentiation. Known for its car safety, it is currently the car manufacturer with the largest number of models achieving the maximum 5-star rating in EuroNCAP crash tests. This feature is very important as more and more people are looking for safety cars.

Besides, to distinguish from other constructors, Renault proposes a large range of models with specific attractive traits. Here are its best sales it, with their key differentiation factors.

In 1984, Renault launched its Espace

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