Renault unveils EUR 5,000 budget car

2nd June 2004, Comments 0 comments

PARIS, June 2 (AFP) - French auto manufacturer Renault unveiled a budget car, the "Logan", for people in poor and emerging countries Wednesday in a venture that runs counter to strategies by rival carmakers which have abandoned such models.

PARIS, June 2 (AFP) - French auto manufacturer Renault unveiled a budget car, the "Logan", for people in poor and emerging countries Wednesday in a venture that runs counter to strategies by rival carmakers which have abandoned such models.

The Logan, which will sell for EUR 5,000 (USD 6,000), was presented to the international press at Renault technical centre in Guyancourt, west of Paris.

Renault hopes to sell 700,000 Logans by 2010 as part of its goal to sell four million vehicles overall that year and might offer it eventually in western Europe.

But there are doubts that the concept will be able to replicate the huge successes of cheap "people" cars in years gone past such as the German Volkswagen "beetle" and French Citroen Deux Cheveaux after World War II or even the British Austin Mini in the 1960s.

The Logan has been developed for countries where consumers have limited purchasing power but who nonethless want modern, functional cars without the accessories favored by drivers in western Europe.

The Logan will initially be manufactured in Romania in factories operated by the Romanian automaker Dacia, which Renault acquired in 1999. But there are also plans for production to take place next year in Russia and Morocco and in Colombia and Iran in 2006 - and possibly in China.

From this autumn the model will be marketed by Dacia in eastern Europe and will later be sold as part of the Renault line in Iran and Russia and possibly Colombia.

In addition, Renault Chairman Louis Schweitzer said Wednesday, the Logan could eventually be marketed in western Europe as well. Schweitzer, due to be succeeded by Nissan chief Carlos Ghosn, said that the Logan would be his last new-model launch.

While Renault rivals Chrysler and Citroen have contemplated making low-budget cars for emerging market countries, only Fiat of Italy - with its Palio - has taken such a step, which has yet to pay off as expected.

"Fiat's Palio, destined notably for Brazil, is an example of the stunning failure of a global model," noted a Parisian auto analyst who asked not to be named.

"A rise in the standard of living there meant an increase in spending in the automobile sector and a trend toward higher-end models."

For Michel Freyssenet of the French research body CNRS, "Fiat, with Palio, did not follow through on its plans, since its car was less modern, its price high and its markets more developed."

By contrast, he added, "what Renault is doing is a break - a specific model for a clientele than cannot for the moment afford a new car."

He said the Renault move remained "a gamble in the sense that this car must create a market that doesn't exist, a market between used and luxury vehicles."

The danger, according to industry analysts, is that the Logan could suffer if it were perceived to be a second-class vehicle, since consumers in emerging countries wanting to buy a car were looking for a "real" car, one that will signal their social standing and success.

The plan to produce the Logan in Romania has also unsettled French labor unions, whose leaders see the move as accentuating a trend to manufacture fewer and fewer cars in France.

"The production of the Logan in Romania, which Renault will be obliged to add to its line in France to compete with PSA Peugeot Citroen and Toyota, and the fact that the Modus (another Renault model) is to be made entirely in Spain are not encouraging signs," said Gerard Blondel an official with the CFE-CGC union at Renault.

© AFP

Subject: French news


0 Comments To This Article