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Renault SWOT Analysis

SWOT Analysis of Renault

#INTRODUCTION

Renault is a well known global brand of automobiles. 2017 was a great year for the company in terms of overall sales and revenue. The brand’s sales grew in all its markets. It sold total 3.76 million vehicles. Its alliance with Nissan and Mitsubishi was also successful in 2017. This alliance became the world leader in sales of passenger cars and light commercial vehicles with over 10.6 million units. Renault’s revenue reached 58.8 Billion Euros in 2017. Europe is the biggest market of Renault. In France alone the brand  sold 673,852 vehicles, followed by Russia and Germany. Its best sellers of 2017 included Clio, Megan, Logan, Captur and Sander.  The brand has set ambitious plans for future and is planning to enter into new strategic joint ventures for the development of electric and light weight vehicle segments. Apart from China, Brazil, India and Iran are also potentially important markets for the brand. Carlos Ghosn is the chairman and CEO of Renault. Check out more about Renault in this swot analysis.

Renault SWOT Analysis

#Strengths:

– Brand image and equity:

Renault has got a strong brand image. It has been there for around 120 years. the number one french brand sells in around 134 countries. Renault has also acquired a leading position in the European electrical vehicle market. Its focus upon quality and technological innovation have helped it build the image of a smart brand focussed upon future. 

– Strong position in European markets:

Renualt’s popularity is very high in the European markets. Europe is its number one market. France is the largest market where it sold 673.85K vehicles in 2017, followed by Russia, Germany, Italy and Spain. Now the brand is working on its strategic plan to rise from its number one position in Europe to become one of the leading brands across the world. Dacia, one of Renault’s brands is present in 44 countries in Europe. Renault is the leading brand in Europe of all electrical vehicles. Nearly one out of every four vehicles selling in Europe is of Renault.

  Successful Alliance with Nissan and Mitsubishi:

Renault has formed a successful alliance with Nissan and Mitsubishi. This alliance has seen immense success and this partnership is expected to strengthen further in future and generate significant cost savings and profits for the brand. In 2017 the alliance became the world leader in the sales of passenger cars and light commercial vehicles with sales over 10.6 Million units.

– Focus upon innovation:

Renault has retained a strong focus upon innovation and invests heavily in this area. Technologically, it is among the most advanced vehicle brands. It is investing in being a world leader in electrical vehicles  as well as autonomous driving and smart mobility. The vehicle industry has become highly competitive and that has resulted in brands being forced to invest heavily in technological innovation. The research and development expenses of the brand grew to 2.6 Billion Euros in 2017 from 2.4 Billion Euros in 2016.

– Diversified product mix:

Renault has a diversified mix of brands and products that enables it to serve various segments of the market from premium to family car segment. The Renault group is made up of 5 brands that include Renault, Renault Samsung Motors, Dacia, Alpine & Lada. Renault is the number one French car maker whereas Renault Samsung Car motors ranks among the top five car makers in South Korea. Dacia is present in 44 countries and has acquired more than 5 million customers since 2004. 

#Weaknesses:

Weak position in Asia pacific:

While Renault has managed a strong position in the European markets, its position in the Asia Pacific is relatively weaker.  China or India do not figure in its top ten markets yet. While the brand is working to grow its presence in China, the task is difficult because of the heavy competition there. It will require formation of local partnerships as well as heavy focus on marketing and innovation.

Dependence on key markets:

The brand is dependent on some main markets. Most of these are European markets. Its two biggest markets are France and Russia. US, China and India are major vehicle markets. However, Renault depends on the European markets which makes it susceptible to economic fluctuations.

#Opportunities:

AI and Digital marketing opportunities:

Technology has brought some great opportunities for vehicle brands. Apart from supply and production, marketing is also a key area for vehicle makers where they must focus to grow their sales. AI and digital channels can help the brand market itself better and engage its customers. Renault must focus upon customer engagement to grow its market share and customer base.

Supply chain digitisation:

A digitally managed supply chain is agiler, smarter as well as more efficient. Digitally managing the supply chain leads to more efficient production as well as higher cost savings. The brand can also use digital channels to manage its supplier relationships better.

Autonomous driving & Mobility solutions:

Renault must focus upon the future of the automobile industry to grow faster and to manage higher popularity. The future of vehicle industry lies in autonomous driving as well as shared mobility. These are some of the key areas where the brand must focus to grow faster and to remain ahead of its competitors.

Diversification:

The brand can also try diversification to grow itself faster. Apart from its technological capabilities and manufacturing facilities the brand can use its existing position to open new channels of growth and revenue like manufacturing motorcycles.

#Threats:

Competitive threat:

The competitive threat has grown in the 21st century. In the vehicle industry especially the competition is quite intense. It is because the number of brands is large and apart from technological innovation , brands are also spending heavily on marketing. There are several large and international brands that are competing directly with Renault. This leads to higher pressure related to innovation, research and development as well as marketing and sales.

Regulatory and legal pressures:

Regulatory and legal pressures in the international market have grown which are driving the compliance related costs very high. Apart from passenger safety, labor, quality and environment related laws are also leading to higher pressure on the vehicle brands. Recently, Volkswagen had to pay billions in fine because of not being able to meet pollution related criteria. Such legal pressures  require brands to have special compliance teams. Any tussle with law proves quite costly and can lead to hefty fines driving costs high for any brand.

 Rising labor and raw material costs:

Globally, the costs of raw material and labor are rising. As such the operational costs of vehicle brands are running higher. This is affecting profit margins and is one of the severest threats before these automobile brands.

Conclusion:

Renault is a famous international brands of automobiles. It is also the largest maker of all electrical vehicle vehicles in Europe.  The brand is focusing on several areas including autonomous driving for faster growth. Its alliance with Nissan and Mitsubishi has been highly successful and is expected to bring higher cost savings and profits for the brand in future. Renault must focus upon growing its presence in the Asian markets including Indian and China. Apart from that it must focus upon exploiting the new opportunities of marketing and customer engagement brought by  AI and digital technology.

Sources:

Renault Annual Report 2017

Renault Group Financial Results 2017

Written by Abhijeet Pratap

Abhijeet has been blogging on educational topics and business research since 2016. He graduated with a Hons. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers.

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