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MKRenault minivan 111107

MKRenault minivan 111107 - Renaults Strategy in the...

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Renault’s Strategy in the European Minivan Business The Renault “Espace” minivan was first introduced in 1984. Though initial sales were very disappointing, with only 9 cars sold in the first month after the model was introduced, the Espace went on to become one of the most popular automobiles produced in Europe since the second World War. From 1984 to 2006, Renault sold more than one million units of the Espace’s four successive versions, which was way above expectations. While the most optimistic predictions for the "first generation" Espace anticipated daily sales of 50 units, actual sales were more than twice this amount by 1986. The Espace II, which came out in 1991, hit 300 units a day, or 63,000 per annum, by 1994. The Espace III, launched in the fall of 1996, achieved daily sales of 350 by 1999. The Espace IV came out in September 2002, with an annual sales target of around 80,000 vehicles. Radically original in design when it was introduced, the Espace opened the "minivan" market in Europe. As it emerged in Europe, a minivan could be defined as a family-friendly monobody vehicle equipped with independent seats that could be rotated and moved around. It could carry up to seven passengers comfortably, while its dimensions and its road performances matched those of a medium-range sedan. Including a 20% VAT, the average retail price of the Espace increased from €26,000 in 1994 to €30,000 in 2000 and €34,000 in 2007. Sold through the Renault network and under the Renault brand name, the Espace had actually been designed by another firm, Matra-Automobile 1 , which was also in charge of manufacturing the first three versions of the vehicle. The body of the car was made of SMC 2 composite panels that were manufactured by Matra and glued onto a steel "bird cage" frame. This technique required a much lower investment than the steel stamping process that all major carmakers traditionally used to manufacture automobile bodies. Matra invested only €230m to produce the Espace II, and €350m for the Espace III, while producing a similar car in steel would have required around €1bn in upfront investments. Using a Renault platform and a Renault engine 3 , Matra assembled the vehicle in its own plant. It then sold the 1 Matra Automobile was a 100% subsidiary of the Lagardere company that also controlled Lagardere Active (press), Hachette Livre (book publishing), Relay (book stores), as well as a 15% stake in EADS (defense and aerospace) 2 SMC (Sheet Molding Compound) was obtained through molding and polymerizing a mixture of resin and fiber. Starting in the 1990s, SMC had been increasingly used in automobiles as an alternative to stamped steel. SMC parts had three main advantages over steel: they were lighter, corrosion-proof, and could resist minor bumps without damage. However, they were more difficult to assemble (they had to be glued to the frame rather than soldered) and were difficult to paint. From a cost perspective, the choice to go with steel or with SMC was mainly determined by the number of parts to be produced. Tools for stamping metal were about six times as expensive as SMC molds. The stamping process, however, was ten times as fast as the SMC process. The variable cost of
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