Logan: Renaults low cost world car

Presented by: (Group 4) Alok Sanghvi Ronak Jasani Saumya Singhal Shailesh Gupta Sachin Jain Sandeep Kejriwal

BACKGROUND

Set up in 1898 by Louis Renault

Primarily an assembly operation Also manufactures Taxi cabs, Buses & Commercial cargo vehicles Started experimenting with Aircrafts & Army tanks and soon became the biggest manufacturer of Aircraft Engines in the world

First car VOITURETTE 1 CV

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After WW1 it diversified into agriculture & industrial machinery

1939-45 (WW2) commissioned to produce trucks for Nazi Germany which halted the production of passenger cars Louis died in imprisonment Company got nationalized

Entered into technological cooperation with VOLVO and Peugeot

Purchased 46.4% stake in American Motor Corporation(AMC)

Renault 4 CV

Dauphire

Renault 4

Renault 8

Renault 5

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Despite success with passenger cars, the company began making losses in 1980s Sold off its stake in AMC to Chrysler corporation for $200 million In 1990 - Got incorporated as Renault, which was the first step towards privatization Launched several successful car models like CLIO, Espace, Twingo, Laguna & the Renault 19

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1999- Made a cross-holding alliance with Japans NISSAN Motors for $3.5 million for 36.8% equity stake Also acquired Romanian auto company DACIA for $50 million Acquisition of a 70% stake in South Korean SAMSUNG motors for $512 million Became the fourth largest company in the world after GM, Toyota Corp. and FORD

PROJECT X90

Strategic decision to expand its presence in market outside western Europe STP

Renault acquired Dacia in 1999

Low cost vehicles for the market First product a mid sized passenger saloon Sell the X90 under a brand name LOGAN

THE MAKING OF LOGAN

Designed to strict specifications Different from other cars

Best Technology and shared expertise

Vision and Mission Competitive advantage Idea behind

KEEPING COST LOW

Logan was a Design-to-Cost project.

Manufacturing the Logan at Dacias Mioveni factory.

Sourced most of production material locally. Costs control by keeping structure of Logan simple.

Symmetric parts made tooling and assembling easier.

Logan was a completely computer-designed by designers.

LOGANS SAFETY & SPECIFICATIONS

Safety Measures: Designed as per EU safety norms

Top-end Logan include Anti-lock Braking System Total safety for driver as well as passenger Honeycomb type structured Dashboard Logan structure was designed to disperse kinetic energy due to impact of collision

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Technical Specifications:

Logan was a three box saloon.

Developed with two engines versions.

In 2005 Logan was launched with 1.5 dci diesel engine.

THE LAUNCH & ITS AFTERMATH

Renault launched Logan in June 2004 priced at 5000 Euros First launched in Romania and then in Central and Eastern European markets High potential for cheap cars Initial response to Logan was very positive Reaction to Logan in Western Europe was not anticipated

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In June 2005, Renault launched a modified version of Logan for customers in Western Europe
In 2005, Renault sold 145,000 units of Logan world wide In April 2007, Logan was launched in India through a joint venture between Renault and Mahindra and Mahindra

THE PROSPECTS

Launch of Logan MCV, a station wagon in 2006

Launch of minivan version in 2007

Biggest strength:- Low price

Logans market not limited to lower income groups Main shortcoming:- Looks of the car Low end version lacking basic features Logans average rating of 3 in Euro NCAP tests

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Impact on other car manufacturers: Volkswagen announced a project codenamed 3-K

Manufacturers in developing countries were also working on extremely low-priced cars.

Toyota announcing radically different process of car manufacturing

CONCLUSION

Logan making a mark on global automobile Industry Only one doing cost reduction aggressively

Renaults design-to-cost approach giving them an edge over others.

Others failed due to wrong cost structures & lack of recouping costs from upgrades & extras.

WHY DID LOGAN FAILED IN INDIA?

Price hardly lower than its competitors High import rate

Indian Government coming up with double excise duty

Problem with distribution channels