Renault to launch the ZE Concept in Switzerland
Are you ready to drive the change? Renault is. In recent years, the world-renowned automobile company has become the poster child for corporate sustainability because of its dedication to incorporating the concept into both its products and its long-term business strategy. Not only has the company demonstrated its commitment to environmental sustainability through the introduction of the Zero-Emissions (ZE) Concept electric car in 2008, but it has also built a successful business model to expand automobile sales worldwide despite the global recession.
Jean-Paul Renaux, the Director General of the Swiss branch of Renault based in Urdorf, sat down with Swiss Style to discuss his experience in the automobile industry, Renault’s new distribution strategy and the prospects for the ZE Concept electric car in the Swiss market.
Renault’s new business strategy
A long-time veteran of the automobile industry, Mr Renaux has truly learned the ropes of his trade. Although he just recently became the Director General of the Swiss branch of Renault in 2004, he has been with the company for nearly three decades.
Originally from Belgium, where he pursued higher education in civil engineering, upon graduation he worked as a researcher at a university for six years, specializing in the technical study of thermodynamics, before joining the Renault enterprise in 1984.
“I’ve held many different positions within the company, ranging from technical positions to sales to retail and now to management,” says Renaux. “I’ve been here in Switzerland for six years now, the longest that one CEO ever stayed in this position. Before, in Switzerland, Renault always rotated its management so that no one stayed in one location for too long. This made it especially difficult to develop a continuous business strategy in the Swiss market. The people in charge of the Swiss branch were always changing, so there was no continuity in the management of this region.”
Because of his extensive stay in Switzerland, however, Renaux was able to introduce a new distribution strategy that greatly increased the total volume of sales in Switzerland. The company did this by simplifying the margin systems, reducing the retail prices and further optimizing the network coverage.
The logic behind this business model was that the reduction in the number of dealers would increase competition for the retailers left in the market and would thus motivate each of them to increase individual sales. Although this strategy may seem counterintuitive, it was enormously successful in increasing overall sales and revenue.
“Since we launched this strategy, we have managed to increase the number of sales per dealer, as well as the total volume of sales globally,” says Renaux. Between 2007 to 2009, the Renault group managed to grow the market share by 1.3 points, putting Renault in the second rank of car brands sold in Switzerland, a position never reached before.
Conquering the Swiss market
When asked about his company’s plans to launch the ZE electric car range in Switzerland in 2011, Mr Renaux expresses hope that the Swiss emphasis on sustainable consumption would help overcome the traditional resistance of the Swiss market to new products and trends.
“When we first started publicizing the electric car concept in Switzerland about a year ago, I encountered a lot of scepticism from consumers regarding its viability,” relates Renaux. “Most people thought it was just a marketing ploy and never imagined it would become a reality. However, public opinion has changed enormously over just this past year. These same people are now much more receptive to the idea of the electric car in Switzerland.”
He adds that, “The Swiss market is a conservative one that does not change easily, but hopefully the sensitivity of the Swiss people to nature and to the environment will contribute to the electric car’s success here.” The Kangoo ZE Concept, which first debuted at the Paris Motor Show in 2008, and the range of four ZE cars presented subsequently at the Frankfurt Motor Show in 2009, are part of Renault’s ongoing efforts to promote sustainability in personal transportation.
The objective of the car, which is designed to run on a rechargeable electric battery in place of an internal combustion engine, is to provide reliable transportation while completely eliminating carbon dioxide and other air-polluting gases from the environment. The battery, which will be leased separately from the car, can be installed in the vehicle in a relatively simple procedure and recharged either at home on any standard electricity source or at a special recharging station.
For various reasons, Renault’s ZE vehicles should be particularly attractive to both Swiss consumers and manufacturers. “Unlike our competitors in Switzerland, who each offer only one electric car model, we offer a wide range of electric cars to fit different consumer needs and tastes,” says Renaux. “So far our company has developed four ZE Concept models – the Kangoo, the Fluence, the Twizy and the Zoe. These models come in various sizes and include cars for urban commuters, professionals, families, city driving and country roads.”
Renaux also points out that the ready availability of facilities for manufacturing the electric car will greatly reduce production costs for the company. “We will build the electric vehicles in our existing factories, most of the infrastructure is already there,” he says. “We don’t need to invest in building plants and factories.”
Adds Renaux, “An electric car concept is also especially interesting for Switzerland because electricity production in this country, which relies mostly on hydroelectricity, is one of the cleanest in the world.”
Funding the electric car
Nevertheless, the manufacturing costs of the ZE vehicles are expected to be considerable. Although eliminating fuel means that the running and maintenance costs of the electric car will be much lower than those of a conventional vehicle in the long run, the initial production costs of the ZE Concept are significantly larger because of the electric battery needed to operate it.
In order to save costs for consumers, Renault plans to sell the car without the battery at the same retail price as a conventional vehicle. Consumers who purchase the car would then be able to rent the battery separately from special manufacturers. Renault has also forged countless partnerships with energy suppliers, battery operators and national and local governments worldwide in order to defray the production costs of the ZE vehicles.
The Irish government, for instance, announced earlier this month that it would provide grants of GBP 5,000 to every customer who buys a ZE Concept vehicle in Ireland. The new owners of the ZE Concept will additionally be exempt from vehicle registration taxes. The Irish government predicts that these customer incentives will result in 2,000 or more electric vehicles on Irish roads by 2011 and hopes that electric vehicles will comprise up to 10% of the Irish automobile market by 2020.
Renaux tells us that he is currently attempting to get the Swiss government to subsidize the ZE business model by granting financial aids to early buyers, a task that has proven more difficult than initially expected.
“Although the Swiss authorities are committed to the development of higher CO2 emissions standards, the unique structure of the Swiss government, which relegates decision-making to the individual cantons rather than to a federal authority, has made it more difficult to get subsidies for the electric car here than it has been in other countries,” Renaux explains. “However, we are still confident that the Renault ZE car range will find great success in the Swiss market.”