Australia's place in Renault's plans

Renault's history in Australia has been episodic, to say the least. And the brand has done itself no favours here in the past.

But that's steadily changing.

Since the company's re-establishment here in 2001, sales have slowly risen to 11,525 last year. In 2016, sales are slower for the year to date, but Renault Australia MD Justin Hocevar says that's due to the run-out of Megane and Koleos ahead of new model arrivals late this year.

The Koleos has already been released and the Megane is due this month. Both are important models in Renault's local range, and the pent-up demand could see Renault finish 2016 with sales around 500 units clear of last year's total, says Hocevar.

"I think we'll hit pretty strong numbers on Koleos pretty quickly," he told motoring.com.au during the launch of the Koleos last week.

"The enquiry levels in the dealers are good; the test drive levels are really strong. Both of those numbers are up where we expected them. Our order write on the vehicle already has been about where we thought.

"So even in this first month we should be up around 200 odd units on that... and our campaign not really in full swing yet."

Renault Australia anticipates the Koleos should average a sales rate of around 200 units a month, once the diesel variant arrives next year. But that's not a huge number in the VFACTS medium SUV segment – not up against cars like the Mazda CX-5.

Hocevar doesn't accept that Renault is selling niche models in the local market however. Nor does the factory, he says.

"We won't be satisfied with niche business; Renault globally is not a niche player. It's a volume brand. We want to become the genuine, European, mainstream alternative. If you look at the journey Volkswagen took in Australia, it was a 10-year overnight success.

"That's kind of the perspective; we're five years into our growth and it's been good. We've gone from really niche volume to [11,525 sales in 2015]. I think we'll improve upon that number this year, despite only really launching key products in the second half. But we should push to the [12,000] mark, let's say. We'd be happy with that, given the product cycles we've been in."

Reaching 12,000 units by the end of the year seems ambitious, when the company has been unable to supply two of its most popular models for most of 2016. For the year to date, furthermore, Renault Australia's sales figures are over 500 units behind the same point last year – so the company will have to pick up around 1000 extra sales in the last three months to achieve the 12,000-sales goal. Hocevar mentions, however, that the brand's growing commercial vehicle sales base should help it across the line.

"We've still got quite a few deliveries of commercials to go; we've got some strong arrivals of Trafic – and there's good demand out there for that vehicle – and we've got another batch of Australia Post Masters to deliver this year," he explained.

Ultimately, however, it's hard not to see Renault as a bit player in this market. Its total sales for the year to date are less than sales of the Kia Sportage alone, never mind a whole slew of SUVs and popular small cars – including the Volkswagen Golf and even Holden's locally-built Cruze.

Renault is highly committed to the Australian market, nonetheless.

"Going in next year we will continue to invest," Hocevar says. "We already had that understanding with head office. They see Australia as a market that will continue to add value to the group, both in terms of volume, profit – but also in other ways.

"The early launch of Koleos in Australia – ahead of any other global market... in fact, even ahead of France and South Korea – and also we ran the Asia/Pacific launch training out of Australia, we contributed to some of the early product development and testing; so that's a way that we're already starting to become a contributor.

"We made the investment in facilities as well. We built a new technical training facility; we've invested in a new apprenticeship program; we've invested in our new corporate head office – so we're here to stay, we're here to keep investing and yes, we do want to continue to grow."

This commitment is at odds with Renault's attitude to the Aussie market in the past, when it burned through two independent distributors and Volvo, before leaving the market altogether. Hocevar himself has been a catalyst for change, but there were signs of improvement even before that. So what has led to this change, Hocevar was asked?

"There's a few things: one is understanding, two is trust. And the trust comes off some credibility. We had to prove ourselves a little bit – back to corporate colleagues in France – to show that there was capability in Australia.

"But from a pure product point of view, when you think of the programs for each of the products – the engineers, the designers, the procurement function, all of those people that work on those products – the tipping point, the changing point was our inclusion in… 'Square-V'.

"Square-V is the global outlook of [Renault] product for key markets. And when you're part of that, your requirements get put into the brief, very early on.

"When we say: 'We have to have this level of safety for our market, we have to have this level of power and output, and efficiency and emissions; and we want cupholders to be this size, and we want our vehicles to be designed in this way...', you can be involved in workshops to get local market feedback on design directions...

"You become part of that global outlook. And, it's helped when you've got someone like [Renault design boss] Laurens van den Acker that's come on board at that point of time as well, and said: 'If you want to make cars for a global market, this is the way you've got to go.

"Clio to an extent, Captur to an extent, but I would say that Koleos is very much a Square-V product that Australia had a contribution to. We'll harmonise with many of the other markets, but at least everything that we ever needed [is included] – even ADR requirements... top tethers, heat shields for grass-fire protection... tow ratings... we need a higher tow rating on the vehicle.

"When you're not part of Square-V, it's like going to the supermarket after the products have all been developed, and asking to take it off the shelf, but modify it to your market. The program's moved on; they're already working on the product that they're going to launch in the next five years."

Square-V kicked off in 2011, about four months after Hocevar joined Renault Australia.

"We had some development issues on Captur that hadn't been considered, but most of our products now have been launched much closer to the global launch of right-hand drive," he said.

While it's important for local consumers to feel their needs are being met, tailoring the product to suit global markets (including Australia) is a slow way to build sales, it would seem. How does Renault feel about the situation in Australia? Will the company's head office play the long game and build to bigger and better, or cut and run, as it has done in the past?

"It's absolutely the start of something bigger and better," Hocevar responded. "Settling for anything less just isn't an option. Australia is one of the largest Completely Built-Up markets in the world. Once manufacturing [here] finally comes to an end... Over a million units of fully imported vehicles... we're actually a big market.

"Japan's north of five million vehicles [a year], but imported vehicles are well under a million.

"[Australia is] a mature market, it's an important market – if you want to be a global player – so... Renault has no intention of shying away from Australia. And they've supported us, with building the organisation and network. We would never have been empowered to go out there and build the network that we've got now, and contribute with products like this [Koleos]..."

There's something of a balancing act implicit in improving sales volumes locally, without sacrificing long-standing brand traits. It's something Subaru seems to have accomplished, but for Renault it's still a work in progress. If Renault moves into the mainstream, must it concede its 'individual' character?

"I would certainly hope not," Hocevar replies, "because it's not as if we're moving away from Renault DNA. The things that have always been true to Renault – that it sees value in – is still there.

"But I think what we're doing is moving away from very Euro-centric – even southern euro-centric – designs, to designs with more international appeal. They still have a kind of latin influence and flair. They're not Germanic... at all, they don't come from the Asian design direction either.

"We're not a 'me too' brand; we'll always have our own unique sense of style... that's the DNA of Renault..."