Renault's new car for the developing world

The new Dacia Logan
The new Dacia Logan

3rd June, 2004

Wednesday 2 June 2004 saw the unveiling of one of the Renault Group’s most ambitious cars. Not a fancy sports car or executive saloon, but a modern, reliable, spacious car to be sold for only 5,000 euros, initially only in developing markets outside of Western Europe.

This car is the first all-new car developed for Romanian carmaker, Dacia, which Renault bought in 1999. The car itself, to be called Logan, goes into production later this year with a sales target of 700,000 vehicles by 2010.

In the late 1990s new prospects began opening up rapidly for the automobile industry. The world's three biggest markets, Western Europe, the United States and Japan, had become replacement markets offering no further potential for major growth. Until then, 80% of the world population had had only limited access to cars, but new, promising and buoyant markets were starting to emerge.

"In 1995, to ensure Renault's profitable growth, I took the decision to expand the company to markets outside Europe," recalled Chairman and Chief Executive Officer Louis Schweitzer, announcing an annual sales target of 4 million vehicles for the Renault group by 2010.

The scale of the challenge and the conditions needed for success were identified. The regions targeted for growth cover huge geographical areas. While they are extremely varied, they do share some features such as high rates of economic growth, albeit with marked cyclical swings.

Potential buyers belong to a gradually-emerging middle class that will be the automobile market's chief vector for future growth. These new customers are fully aware what vehicles are available worldwide but cannot always afford a new, modern car. When buying a car is possible, it is often regarded as an investment.

Another feature of the emerging markets is that driving conditions are often difficult, with extreme climates, roads in need of repair, irregular vehicle maintenance and cars frequently carrying heavier loads than they were designed for.

Some of these markets are closed to imports in order to protect local industry and put pressure on international car manufacturers to build production facilities in the countries concerned.

Goals: competitive pricing, reliability, durability, and the best of Renault technology

With this in mind, in 1998 Renault began looking into the possibility of making a modern, robust and reliable family car at an entry-level price of 5,000 euros. The following year, Jean-Marie Hurtiger was put in charge of the project. "It was a fascinating challenge," he said. "We had to start from scratch on the first vehicle developed by Renault for sale initially outside Western Europe, and a programme in which financial considerations were key."

Right from the start, the goal was to meet the demands of customers for whom a car was a major purchase and whose chief criteria were the price, reliability and durability.

The second stage of the project came about early in 1999 when Renault took over Romanian car manufacturer, Dacia. As part of the deal, Renault acquired a production site that was technically obsolete but had high competitive potential, located right at the heart of targeted markets in Central and Eastern Europe.

"It was another completely fresh start. We had to modernize the plant and organization methods, all in under five years. But we could rely on Renault's commitment and on the valuable input of our Romanian colleagues," said Christian Estève, the first Dacia general manager appointed by Renault. Pitesti, the leading assembly site in Romania, was completely overhauled and brought up to a similar level of efficiency and quality as the Renault group's other manufacturing sites, which rank among the most efficient in the world automotive industry.

Logan: a modern, spacious, affordable car for a huge international customer base

The car itself, to be called Logan, was defined fairly quickly, with a model close to the final version produced as early as the autumn of 1999. Development was handled entirely by Renault's engineers based at the Technocentre near Paris. It is a three-box model of simple design featuring five full-size seats and a large boot, and built to comply with the safety and emission standards in force in the European Union. Renault decided to use its 1.4l and 1.6l petrol engines, which have proved reliable and inexpensive to run. By the end of 2001 the vehicle was part of a broader programme that will eventually include several body styles and engines so as to meet the needs of different types of customer who may use the car for both business and pleasure.

Now, in June 2004, Renault is introducing Logan, the first vehicle in the X90 programme. A three-box saloon, Logan offers best-in-class price/space ratio, with five full-size seats and a very large boot. Its features are exactly suited to the types of use envisaged, especially in terms of reliability and robustness. The modern design is in line with international standards, European Union norms and those in force in the countries where it will be sold.

It also supplies all the fundamentals of a modern vehicle, with dynamic features and safety to European standards, as well as an attractive, upmarket design. It is a 100% Renault product (design, technology, development, chassis and powertrain) and will be sold under the Renault brand on some markets. Whether the Dacia or Renault badge is used will depend on the characteristics of each market and on how long and in what circumstances Renault has been established there.

In Central Europe, Turkey, northern Africa and the Middle East, Logan will be marketed under the Dacia brand, extending Renault's range of vehicles. It will be positioned in the entry-level vehicles segment which in a country like Poland accounts for 30% of the automobile market.

On other markets where Renault has a relatively limited presence, Logan will help to win new customers for the brand. In Russia, for instance, Logan will have a Renault badge and will be competing in the segment of new vehicles sold at between 8,000 and 10,000 euros, which account for 90% of the market.

Logan's modernity and quality, along with the fact that it is 100% Renault technology and will be sold by Renault dealers, will underpin the construction of Dacia's brand image.

Five production sites planned from launch

The international development programme was drawn up in mid-2002. In addition to the Pitesti pilot plant in Romania, Logan will also be made in Russia, Morocco, Colombia and Iran, with the same goals of cost-effective production close to its markets.

Investment of 230 million euros to build a plant in Russia, in partnership with the Moscow City Authorities, was announced in February 2003. Initial production capacity will be 60,000 vehicles a year. In July 2003 Renault decided to invest 22 million euros to build a production line at the Somaca plant in Morocco with capacity of 30,000 units a year. It was decided to assemble the car in Medellin, Colombia, from 2006, with annual production capacity of 44,000 for investment of 16 million euros.

The most recent major decision concerned production in Iran, with the announcement of the creation of a joint venture company, Renault Pars, in partnership with the Iranian automotive industry. Logan will be made in Iran from 2006, with investment of 300 million euros and production capacity of 300,000 units a year.

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