The Truth About Cars » Renault Clio http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 16 Jul 2014 11:00:35 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Renault Clio http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com Renault, PSA Face Unprofitable Paradox http://www.thetruthaboutcars.com/2013/02/renault-psa-face-unprofitable-paradox/ http://www.thetruthaboutcars.com/2013/02/renault-psa-face-unprofitable-paradox/#comments Wed, 20 Feb 2013 17:16:51 +0000 http://www.thetruthaboutcars.com/?p=478171

Prevailing wisdom today holds that small cars, manufactured in developed economies are some of the least profitable cars in existence. So why do companies like Peugeot, Citroen and Renault persist in producing them?

In article in La Tribune (France’s leading business paper) explains why. Once upon a time, when Giscard d’Estaing ruled and the Fifth Republic was just being digested after a spicy summer of 1968, France decided to tax big cars, in the name of Libertéégalité, fraternité. Since the biggest market for French cars was France, Renault, Citroen and Peugeot decided to switch to producing small cars – the Citroen SM was a footnote, rather than a mainstay of France’s auto industry, despite what the buff books tell us.

Up until recently, things were tries bien. Renault, for example, sold nearly half a millio Clio and Twingo models in 2012 alone. Not bad for a company that mostly plays in Europe, but these cars are also not so profitable. Renault is able to produce these cars in Turkey and Slovenia respectively (with some Clio production still kept in France) which takes away some of the sting.

Over at PSA, things are much more dire. Small cars (B and C segment, for clarification’s sake) make up about 45 percent of their sales, but a good chunk of them are built in France. Workers there earn 35 euros an hour, compared to 22 in Spain and just 10 per hour in Slovakia. PSA’s CEO told La Tribune that a new Peugeot 208 built in Slovakia would save an astonishing 700 euros per car, along with the contentious labor negotiations that go hand in hand with French organized labor. At Renault, the cost difference is even more staggering, with 1300 euros saved on the Clio when it’s built in Turkey. Any surprise that since 2005, both companies have cut their domestic production in half? The strong social safety net and egalitarian society designed to protect the workers has ultimately resulted in a contribution to their declining fortunes.

Ironically, the small car segment, for all the talk about shrinking profits, is growing in France. Registrations have continuously increased since 2007, from 45 percent of all cars to 53 percent in 2012. But the only way for car companies to make any money is to wither away domestic production in favor of the Dacia approach; old technology, no frills packaging and ultra-low cost production in developing economies. So far, only Renault has this capability. PSA is trying it’s hand at the Fiat and Mini approach, positioning Peugeot and the Citroen DS line as “premium” small cars, in the hopes of squeezing some more margin from their products. Given the increasing stratification in the European car market (where only the high and low ends can make any money) it is a risky approach. But not everyone wants to drive a Dacia, and not everyone can afford a Benz.

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Adventures In Marketing: Outrun Satan’s Temptations In a Renault Clio http://www.thetruthaboutcars.com/2012/05/adventures-in-marketing-outrun-satans-temptations-in-a-renault-clio/ http://www.thetruthaboutcars.com/2012/05/adventures-in-marketing-outrun-satans-temptations-in-a-renault-clio/#comments Thu, 17 May 2012 15:30:49 +0000 http://www.thetruthaboutcars.com/?p=444774 In 1999, you could still buy a brand-new Peugeot 504 in Argentina. With such a classic French automobile available, Renault’s marketers had to come up with an extra-special advertising gimmick to move those Clios off the lot. How about El Diablo?

For you non-Spanish speakers (I can’t find a good subtitled version), it goes like this: Satan (in snazzy red silk tie) offers the Clio driver women, money, and power in exchange for his soul. Driver refuses. Satan tells driver he doesn’t understand anything about life. Driver responds “You don’t understand anything about cars!” and evades the onrushing trucks via a suspension-of-disbelief-required maneuver on the dirt shoulder. Would this have happened in a Peugeot 504? No, because Satan would have fallen asleep due to the spacious back seat and comfy 504 ride.

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