The Renault Group has long boasted of its popularity with private car buyers, particularly through its Dacia brand. However, recent declarations that it wants to move more into the fleet segment have worried some investors, who fear it means a return to deep discounting.
Traditionally, private sales are of higher value than sales to businesses, who use their promise of bigger orders to push for lower prices.
Renault’s expertise in smaller, cheaper ICE cars chimes better with the need of private customers, but its shift to bigger models (such as the Symbioz and Rafale) and the growth of tax-friendly hybrids have led to it targeting fleets.
This concerns investors, who have been generally keen on Renault’s transformation under CEO Luca de Meo and in particular its ability to keep pricing high.
“In our view, margin in fleets are typically lower, so the company has to prove that the strategy change does not lead to significant margin deterioration,” Tim Rokossa, head of research for Deutsche Bank, wrote in a note.
Across Europe in the first half of 2024, the Renault Group is still more of a retail business, with 62% of its sales being to private customers, versus an industry average of 40%.
The Group boasts that Dacia’s 80% retail share is the highest in the industry, with the Sandero being Europe’s most popular retail car. Renault's is split 50/50 between retail and fleet, according to company figures.
Renault’s view is that fleet sales don’t have to be distressed sales; they can still maintain a profit.
“When you are 20 points above the average [on retail sales share], it may be time to do a bit of good fleet, now we have new C-segment cars. but we can define the condition ourselves,” de Meo said on the company’s second-quarter earnings call. “We're not going to go into fleets to discount cars.”
De Meo’s rallying cry since he joined the company back in 2020 has been the expansion into bigger, more profitable segments. Back in 2021, compact cars made up a quarter of Renault’s sales, and de Meo set the target of doubling that.
That strategy is now bearing fruit with the likes of the Symbioz, which squeezes in between the Captur and Austral. In addition to that and the Rafale, there's also now the Espace and electric Scenic. All are SUVs.
Dacia too is moving upwards, with the Bigster SUV expected to be revealed at the Paris motor show in October and two more planned C-segment models coming later.
That strategy has yet to play out in sales, however. In the UK, across the first seven months of 2024, the compact Clio and Captur took two-thirds of Renault's sales.
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