Renault has startled the world’s car producers by making good on its commitment to build a ‘$6,000 car’. Karl Ludvigsen, whose consultancy advised Renault on the project, assesses the chances of a daring and unique initiative.
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I’ve always admired the creative drive that underpins the success of Europe’s auto industry. Aluminium bodies, disc brakes, common-rail diesel injection, multi-link suspensions, variable valve timing, advanced and exotic materials – Europe’s car makers and their suppliers constantly push for the most advanced technologies for their products. This has been, and remains, an important advantage for the European auto industry over its rivals in America and Asia. The way the Europeans push forward with new technologies, it’s hard for competitors to catch up.
Some, however, are wondering if this relentless upmarket pressure has left too many car buyers behind. In Germany, for example, Götz Leyrer wrote that Ford expects to base-price its new Mustang below $20,000 in America, close enough to €16,500 or £11,000. That’s a lot of automobile for a price, said Leyrer, that’s less than a €17,000 VW Lupo TDI in his driveway. Of course, he remarked, the Mustang has a live rear axle, a technology that’s regarded as Stone Age in Europe. He pointed out that the sophistication of the latest Golf’s multi-link rear suspension will be lost on most of its buyers, who nevertheless have to meet its costs.
Auto journalists have their share of responsibility for the rejection of low-tech solutions. They turn up their noses at cars like the Malaysian Perodua Kelisa (£4,999), Korean Kia Picanto (£5,495) and Indian Cityrover (£6,495). Simple, straightforward cars without all the latest technological bells and whistles don’t earn their respect. Admittedly, there’s an exception. Fiat’s new Panda (£6,295) has won praise from the auto writers for its honest design and good road behaviour – a return to the virtues that once marked the best of Fiat.
Now there’s a new low-priced car on the block. I refer to the newest Dacia from Romania, the Logan, as described recently in just-auto.com by Mark Bursa (click here to read). In 1969 I attended the launch of its spiritual predecessor, the Renault 12. Significantly, the 12 was conceived by Renault as a design that would be well suited for manufacture and assembly abroad. That accounted for its longitudinal-engine front-drive layout and its use of straightforward coil springs at all four corners. The 12 became the basis of the Romanian Dacias and Ford’s Corcel in Brazil. It’s still the foundation of the base Dacia models. Come to think of it, I maintained my relationship with the 12 by writing the brochures with which Renault sold them in America.
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By GlobalData |
Renault’s Logan |
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How did Renault drive down the price of its daughter Dacia’s new Logan to meet its €5,000 target? It achieved Louis Schweitzer’s goal precisely by not innovating. It told its engineers and designers to use available bits from their parts bins to create a new model that would meet but not exceed the expectations of many world markets. Its bare-bones approach, eschewing innovation that didn’t add value, wasn’t unlike the way the Twingo was created.
An important open issue for Renault in its $6,000-car project was branding. How should it market the car? Should it use the Renault brand, or Dacia, or some combination of the two? Or should it create a completely new marque? They turned to none other than Ludvigsen Associates to resolve this issue. We surprised them with our finding, which was that they should stick with Dacia. The brand had a good reputation in its home country and in Central Europe, while elsewhere it was little known. While Dacias had been sold in the west, their impact – positive or negative – had been slight.
It’s always nice when a client acts on your advice. The Logan will be a Dacia in most of its markets. The only exceptions are Russia, Iran and Colombia, where it will be branded as a Renault and given a Mégane-like front end. A decision hasn’t yet been made about China, but I’d be surprised if the Renault brand weren’t used there.
Speaking of names, I do hope that when Renault brings out the Dacia’s additional body styles it simply names them as different versions of the Logan. It’s never been clear to me why Fiat used Palio, Siena and Strada as names for different body styles of its 178, the world-car project that it launched in 1996 with its Brazilian plant as its linchpin. The different names may have been part of its effort to mix and match models from the 178 range for distinct markets, but this aim seemed to be defeated by associating the names with body styles rather than market demands.
Dacia Logan, like Fiat 178, is a bold effort to overcome the problems that car makers face in marginal secondary markets, namely their inability to generate enough in the way of profits to pay for needed updating of their products. This way, the aim is to generate enough overall volume to be able to justify facelifts and new platforms as and when required, on a global basis. The risk, of course, is that the single product made in this manner will be not quite right for most of its markets. That’s been the hurdle that’s tripped up most “world car” projects in the past.
Fiat’s 178 traced its beginnings to a plan to facelift the Brazilian-built Uno in 1992. From there it progressed in 1993 to a full-fledged effort to design a single product to suit many secondary markets. Key project-driving nations in addition to Brazil were Argentina, Poland and Turkey, with high hopes for India and Russia as well. The 178 project’s theme was to have the vehicle absolutely identical in all the producing countries. A special controlling centre was set up at Orbassano to check the parts being made at many different locations to gauge their conformity. Another aim of the 178 project was a car that would meet European safety and emissions needs, although this wasn’t required by all its markets.
Instead of designing the 178 in-house, as Renault did with the Logan, Fiat farmed it out to the extent of 80 percent of the work by value to Turin engineering consultancy IDEA. This reflected a general trend at the time for Fiat to outsource many activities, such as TNT’s assignment to handle its internal logistics. For the 178, with sheet-steel pressings coming chiefly from Brazil and Turkey and going as far afield as South Africa and Morocco, the global logistics challenge became mind-boggling. Fiat had to create a special category of employee, “packaging technician”, to cope with the preparation and handling of parts.
Fiat’s 178s were rolled out starting in Brazil in January 1996. Not until 1998 did key participant Turkey begin its production. India was a disappointment, one partner falling out and another failing to proceed, while in South Africa the local Nissan plant agreed to assemble 178s. Sourcing complexity there was such that sedan body panels from Morocco had to fit with rear doors coming from Brazil. In just such ways the project posed almost insuperable challenges to Fiat’s Global Sourcing Department and to the monthly meetings of its World Purchase Committee.
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Fiat’s 178: first generation Palio |
Overall, said an academic study of the 178 undertaking, ‘the project complexity a) tremendously increased as it began touching significantly different countries, like India; b) required product customisation and conspicuous local adjustment in technologies, organisational structures and management practices, especially in existing brownfield plants. In India, the “world car” approach did not prove to be completely robust. There, in fact, the strong commitment to global optimisation and cross-country standardisation has been challenged by the peculiarities of local competition, institutional constraints and cost factors.’ Nor was Fiat thrilled when local producer Tata launched its Indica, designed – like the 178 – by Turin’s IDEA.
Three and a half years from its launch the 178 saw its millionth car produced. This was short of expectations, however, owing to the slump in the South American markets on which the concept materially depended. To its credit the Dacia Logan hinges relatively little on fickle South America, apart from a small module for Colombia. Rather, its critical mass is based on Romania and Iran with China a major hoped-for add-on.
Insiders at Fiat have told me that as far as they’re concerned the 178/Palio is a failed concept. The dream of a true world car became a nightmare of conflicting national desires and demands that had to be satisfied by an almost unmanageable supply infrastructure.
Can the 21st-Century version – the Dacia Logan – succeed? Much will depend on whether the model’s vaunted low variable cost has in fact been achieved. If it has, the upscale launch models will be profitable. It’s going to be a close-run thing. I can see the Iranians taking to the Logan, but will the Chinese? Won’t they want the best the West can deliver, not a Frankenstein’s monster assembled from miscellaneous body parts? The balance of this year will tell the story.
For more background and detail on the Renault Logan:
Logan: Renault’s ‘world car’
Karl Ludvigsen is an award-winning author, historian and consultant who has worked in senior positions for GM, Fiat and Ford. In the 1980s and 1990s he ran the London-based motor-industry management consultancy, Ludvigsen Associates. He is currently an independent consultant and the author of more than three dozen books about cars and the motor industry, including Creating the Customer-Driven Car Company.
