Renault Looking at Jaguar?
According to a report in L'Expansion, a leading French business magazine, Renault is looking at the possibility of buying Jaguar. The French company has never seen satisfactory sales for its top-of-the-range models, and new boss Carlos Ghosn is said to be keen to reverse that trend, knowing that luxury cars are more profitable than the small models that are Renault's specialty.
The report says Renault has been rebuffed by Volvo but Jaguar is seen as a possible target. Both Volvo and Jaguar are owned by Ford, and while it is reasonable that Volvo, the most profitable of the Premier Automotive Group brands, would not be available, Jaguar has contributed little but red ink to the Ford balance sheet since it was bought in 1989. In view of Ford's current business situation, shifting the British manufacturer for a cash injection could be more acceptable.
The interest in the luxury sector is caused by a need to bolster Renault's profits. In the first ten months of this year, Renault has seen its share of the European market slip from 11.3 percent to less than ten percent, with sales of its best-seller, the Megane, dropping by eight percent and its large family sedan, the Laguna, losing 20 percent despite a recent facelift.
Ghosn is due to reveal his strategic plan for Renault's future on February 6, 2006, and it will need to address the problems that have surfaced this year to spoil what was a bright sales performance. The Mégane continues to sell well, as does the newly redesigned Clio, recently elected European Car of the Year. The Twingo citycar, mainly sold in France, holds its own in the sales charts but it is old and nearing the end of its lifespan. However, Ghosn has put back the launch of a replacement, due next year, which he did not consider good enough.
The Modus, positioned between the Twingo and the Clio, is a result of Renault's alliance with Nissan, and has much of the Micra in its gene pool. It has not, however, been a good seller in its first year of life, and sales forecasts have been revised downward drastically. In the family sedan category, the Laguna has not been a great performer since early examples were blighted by electronics problems. Even the Espace, the pioneer of the minivan revolution, is losing sales as the niche it once had to itself becomes overcrowded.
The major problem is the top of the range, where the radically styled - and strangely named - Vel Satis, which was meant to establish Renault as a force in the luxury market, has bombed. Thanks to a tax system that historically punished large-engined cars, France has had no success in the top class since the end of the Second World War. It has left Renault, Peugeot, and Citroen with no heritage to build upon and no worthwhile engines of over 3.0 liters capacity to compete. Hence Renault's interest in buying luxury-car expertise and heritage. The company also lacks an SUV, but that is being addressed by taking one that will be built in Korea by Renault's Samsung division, due to go on sale in 2007. -Ian Norris
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