Olivier Murguet, Executive Vice President, Sales and Regions, Renault Group and serves on the executive committee Renault Group.
Renault is famed for its small cars, but is the small car still profitable?
It is profitable but it depends market by market. When it goes below a certain level it does not work. You cannot have a similar margin as a larger car. Global perspective shows the 'A' sized car (city car) is profitable. Outside of Europe the Renault Kwid will sell around 200,000 this year, mainly in Latin America and India. In emerging countries it is a very profitable car. Europe is not a big market for A cars.
Why aren’t European’s buying small cars?
A couple of years ago the A segment [small city cars] was the car people were buying. My first car was a used small car and it was all I could afford. Today I have a 22 year-old son and his priority is not to have a car. He uses every other kind of mobility in the city. For longer trips - he takes my car. City dwellers are looking at a new kind of mobility and will rent this type of car and this is why we are seeing the rise in car sharing in cities. The day an electric [CITY CAR]car comes to the market for car sharing, it would have huge success. We are in the middle of a transformation period clearly.
What about rural areas where car sharing and transportation in general is poor and a big issue, are small cars too expensive?
Profit depends on price. If the cost of building a car increases we must ask ourselves do we have enough customers to buy these cars. The B segment is the heart of the new car market more so than smaller cars and therefor not our main turnover.
How far off is an electric city car?
Two weeks ago we announced in China a City KZ-E, a Kwid EV of sorts and it will come to Europe in a couple of years. There will be a big market for car sharing and this car will be perfect for that.
Are there any plans for Renault to enter the US market?
No. We have no plans to go there, as we are very busy to conclude our International expansion. A couple of years ago Renault was a very European company and we decided to expand strongly out of Europe, in Brazil, Russia, India and China. We are fixed in Brazil and Russia. Nine per cent market share in Brazil and a big player, in Russia we have 29 per cent market share between Renault (8) and Lada (21) And are profitable. India we are fixing and are launching our second locally produced car called Triber. Our ambition is to go to 200,000 sales in three years in India, which is a kind of profitable size. In China we are beginning and a small player and this consumes a lot of resources.
How is Renault’s relationship with Nissan, are you going to separate from the Allience (Renault/Nissan/Mitsubishi)?
(Laughter) No, why separate? No. The Alliance is a 20 year old cooperation. Today we have common platforms, common engines, we have common R&D for the future. Our last announcement was with Waymo the autonomous company about three months ago. We are very interlinked. Last month there were some issues... that can happen like in a marriage no? So you've kissed and made up? I can tell you that the people working in the Alliance we feel that it allows us to be what we are. We are able to invest in all the technologies and territories now, it is because we are sharing in the allience. New Zoe is common EV technology - those are big deals made for a long time.
What about the courtship of FCA (Fiat/Chrysler) and maybe others?
With FCA there was clearly no discussion, so no, it's over. Obviously we have partnerships with Opel, Daimler with engine makers and other brands. Our competitors are teaming up in partnerships and we will see more of these. We are in a transformation and must invest in new technologies. We are investing hugely in EV and we have to invest hugely in hybrid also and we have to keep gasoline and diesel. Diesel is plunging but there is demand. And then we keep going and must look at autonomous, new mobility and of course car sharing. This requires a lot of investment. It's important and the only way to face that is to share the investment. Everybody is planning to do so. There are a lot of start ups today and we are picking up a lot of new technologies and making partnerships with start ups. A lot on batteries as there are many more start ups outside of the big three players.
We have the Alliance venture fund with some 100s of millions with the objective to track starts ups that have tech we want. We then decide water to buy them or invest in them. W heave very strong partnerships. A good example is Zity a car sharing partnership in Madrid with 650 Zoes and it is expanding Ove rEurope - it was born out of Renault. All around the world we have what we call Renault Lab. We have half a dozen laboratories around the world in known start up locations. we observe their pitches and then help make the bridge from raw idea to big business who can accelerate the idea.
What is Renault’s stand regarding hydrogen fuel cell technology?
We are already selling a Kangoo Z.E. electric with a fuel cell application, as a range extender. It is not yet very competitive and the way hydrogen is generated today is not very CO2 friendly. To be very clear hydrogen has very good potential for B to B (business to business), especially large trucks. Long haul and use in the suburbs it makes sense but it is really a compliment to EVs that are ideal for urban use. We do not want to oppose technologies, it is complimentary.
Do EVs make Renault money, are they profitable?
We don’t lose money anymore and are covering the cost of EVs. It is now a positive cash programme after many years. The numbers are growing - but still small. This year around 350,000 EVs will be sold in Europe compared to 17m regular cars.
Will there be a time a Renault EV will be price similarly to a normal petrol or diesel car, can you see the intersection in the graph?
No, I cannot see it yet. In China it can be easier to buy a small EV than a regular car due to legislation but in Europe it is a different case.
Will electric vehicles help Renault reach strict European emission targets?
Not EVs on their own but electrification will. By 2021 half of all Renaults sold will be electrified and this will greatly reduce emissions. By 2022 we will have eight EVs on sale representing 10 per cent of overall sales.
Volkswagen is building its own battery plants for its electric cars, why isn’t Renault?
We are happy to go with partnerships. There are many big names making batteries like LG, Panasonic and Chinese brands and many start ups also. We are happy to go this way.
What lies ahead for your sporty Alpine brand?
Alpine has been a huge success, a success that surprised us. Demand has been enormous for the €60,000 sports car. What is the next model and will EV feature? I’m not saying but we have a unique product and customers are demanding more performance and more comfort too. As for EV, yes it could be part of Alpine in the future.
Finally is Brexit a big issue For Renault?
Yes. We are concerned as cars will become more expensive over there. We do not have a production plant in the UK so we are less exposed than others.
In conversation with Michael Sheridan
