Fleet News

Face-to-face: Keith Hawes

RENAULT'S new Megane range is bringing avant-garde styling to the lower-medium sector in a move to attract user-chooser drivers. Renault's fleet and commercial vehicle director Keith Hawes explains the motivation.

Typical. You wait four years for a radically different car to come along, then three arrive at once. The surprise is not just in the cars' design, but also in the fact that all three come from the same manufacturer – Renault.

With the Vel Satis and Avantime, the French manufacturer has provided a genuinely alternative vision of the 21st Century executive car, while the sharply-styled forthcoming Megane offers a freshness of design not seen since the arrival of the Ford Focus in 1998.

For Renault, the arrival of the new Megane in significant volumes on the road may even make the Vel Satis look less avant-garde and more mainstream.

Critics said the Focus was too radical to appeal to the essentially conservative audience of buyers looking for a lower-medium sector car, but the car has been a runaway success in the UK, topping the best seller charts for more than two years.

Renault clearly has the Focus in its sights, along with the Volkswagen Golf, and is bullish about the prospects of the Megane to capture user-chooser business in a way that only the coupe and cabriolet from the current range have managed to achieve.

Keith Hawes, Renault fleet and commercial vehicle director, said: 'The Megane is designed to stand out in a sector that is pretty boring, and the specification level even on the lowest models is very good.'

Early indications suggest mid-range Meganes will compete on price head-on with Focus and with entry-level Golfs. With four diesel engines in the range (two different power outputs from both 1.5 and 1.9-litre diesels), Renault will have a low emission Megane to suit all tastes in the diesel-addicted company car market.

The specification mix of the new Megane will certainly be interesting, given the relatively rich trim levels of the new Laguna, which has succeeded in capturing user-chooser business – the target market for every manufacturer given the better margin, the 'real' customer, and the sensible remarketing of the cars at the end of their fleet lives.

Hawes cites figures to show that in the contract hire market the Clio is second in its class, the Espace number two, and the Laguna number four, behind the BMW 3-series, Audi A4 and Ford Mondeo.

The more a manufacturer can compete in the user-chooser market and the less it has to rely on cut-throat volume deals, the better its financial figures, and Hawes sees real competitive advantages for Renault in its relatively recent entry to the fleet sector.

In 2002 the company may be the third best selling fleet manufacturer, but he believes the brand is not tarred with the essential user image of longer established fleet players.

'The change in the fleet market has been to the detriment of older marques, because tax changes lead to more driver choice. And with wider choice, the big traditional fleet marques have seen the erosion of their market share, while the prestige marques have seen their volumes grow,' said Hawes.

Renault does not qualify as a prestige marque, despite the executive pretensions of the Vel Satis and Avantime, but nor does it represent classic 'repmobile' territory. 'Our user-chooser business is growing fairly rapidly, and we will strengthen that with new Megane,' added Hawes.

He claims that when Renault finds itself in two and three badge fleet supply arrangements it will take the majority of the orders, and that the company's new diesel technology is increasingly appreciated by tax-shy drivers.

About 60% of Laguna sales are now diesel, characteristic of the market sector, and Hawes sees no great concern for the cars' residual values when they arrive in a used car market not yet accustomed to digesting diesel in such volumes.

He accepts that used diesel cars may lose their premium over their petrol equivalents, but said there are still used car buyers for whom diesel is very attractive because they cover high mileages and tow caravans and trailers. And well maintained diesel engines still boast greater longevity than petrol units.

'Used car buyers may not be driven by the same issues as company car buyers, but the situation is not as bad as the 'bears' would have it,' he said.

'There's no reason in the economy, with good employment and low interest rates, why residual values should be coming down. Manufacturers are not self-registering cars anymore, there are not that many imports coming in, and we are all remarketing ex-rental cars in-house and generally very well.'

Protecting the residual values of the Vel Satis and Avantime is a different challenge, and Renault has developed a comprehensive strategy to assist the cars' used values. With neither dealer bonuses nor fleet support, the two cars are meeting natural, not forced, demand as new models, and Renault also wants first opportunity to bid for the cars as used models when fleets come to sell them.

Forecasts from the used car market guides and the leasing sector have not been favourable to the executive contenders, with the legacy of the anvil-depreciating Safrane hanging over them, rather than the much better performing Espace.

But as halo cars, they do at least show the technology and styling boldness that will characterise future Renault models.

Creativity of a different kind is currently being applied to fleet funding arrangements, and Hawes identifies significant strategic change in company car plans and the development of structured personal leasing schemes.

He splits these into three categories – schemes designed as genuine alternatives to company cars; schemes designed for employees not entitled to a company car; and schemes organised by affinity groups for their members.

'The question is when is it a fleet car and when a retail car? Normally, when a company is taking the residual value risk, controlling the purchase centrally and deducting payments from the employee's payroll, then it's a fleet car,' said Hawes.

He suggests a similar case could be made for a staff scheme for non-company car drivers if the choice of manufacturers available is restricted, payments are salary deducted and the scheme is run through a contract hire company.

But the grey market of affinity schemes run by organisations as diverse as supporters clubs, whose membership is not always as united as claimed, remain retail buyers in the eyes of Hawes, who says that when the sum of the parts of most retail-based dealer schemes was counted, the value of such affinity offers is negligible.

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