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Renault: the business model is being reshaped

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In a post published in April 2012 we were discussing the evolution of the car production in Europe and how business models needed to be reshaped. We were in particular dealing with the case of Renault, which was producing 75% of its cars outside of France and which was faced with huge challenges. Our conclusion was that Renault had to focus on the low-end segment (which was more profitable than the middle one) and use its French factories for other types of vehicles. Electric cars were a long-term option. As a short-term option Renault seems to have chosen to fight German brands on the top-tier segment. The rebirth of the mythic Alpine brand is on its way, and according to rumors the creation of a luxury brand would be in discussion. The name of this luxury brand would be, according to Les Echos, “Initiale Paris”.

My take:

It’ll be hard for Renault to compete with German brands in the top-tier segment. French cars lack the legitimacy to give their owners a social status as German cars do. Yet, refocusing the French production is a requirement. Renault needs desperately to go out of the middle segment and will eventually focus exclusively on the two ends of the market.

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Author: Pierre-Nicolas Schwab

Dr. Pierre-Nicolas Schwab is the founder of IntoTheMinds. He specializes in e-commerce, retail and logistics. He is also a research fellow in the marketing department of the Free University of Brussels and acts as a coach for several startups and public organizations. He holds a PhD in Marketing, a MBA in Finance, and a MSc in Chemistry. He can be contacted by email, Linkedin or by phone (+32 486 42 79 42)

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