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I Spotting a gap in the market
Page 18
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THIS WEEK
Renault Trucks is pushing for a 1% market share increase in what is a shrinking arena. We talk to commercial director Nigel Butler to find out how.
Words: Kevin Swallow / Image: Tom Cunningham
SINCE HIS ARRIVAL in June 2007 Nigel Butler, commercial director at Renault Trucks UK, has worked hard to minimise the company's vulnerability to road transport's peaks and troughs.
Firstly, digital tachographs and Euro4/5 regulations persuaded British hauliers to stick with analogue and Euro-3. As a result, and fearful that the UK's quota of trucks off the Renault production line might be eaten up by growing markets in the East, franchised dealers were ordering to secure supply.
As registrations dropped and orders continued. Butler stopped taking orders from the network in October 2007 "I couldn't believe any of our dealers were talking to customers about 2009 supply. I restricted order intake, pegged lead times to 12 months," he says.
Sales targets
With a new quota starting in January 2008 Butler reopened the books and Renault Trucks put in place measures that would stop any ordering in order to secure supply issues.
Ageing fleets reignited customer confidence but by the end of April Butler decided to put the brakes on again. He consulted the dealer network to reduce the number of orders being put through as a group.
He says: "From May, we were asking: 'what have we got on order, and is the customer in a position to take it?:" As Christmas closed in, Renault's UK sales fell away. missing its 4,800 target for vans and trucks by 200 vehicles.
Butler picks up the story:"Fiscally we didn't meet our target but last year was a solid performance; we ran on budget." He adds: "Ignoring the exchange rate effect we did better than expected."
Throughout 2008 the contract hire business started to expand and cashed in on restricted supply from dealers and ordering vehicles in advance. This side of the market now accounts for around 15% of Renault's business.
Now, in 2009, the downturn in sales has continued with the over six-tonne market expecting to drop from 48.000 units to 33,000.
On top of that Butler intends to increase Renault's share of the market by 1°/n in that sector. "Last year it was 5.2%. We started 2008 with zero stock and finished with more stock than we would really like.
"So that will be factored into what we take from the factory. We are working on strengthening the dealer network by appointing new and stronger members and working across the network on dealer standards," he says.
Reinforcing both servicing and the aftermarket is key. Butler thinks, and he adds the rental and contract hire markets could play a bigger role as the recession dents enthusiasm for owning vehicles.
Rental growth
"Operators don't want to commit to long-term expenditure," Butler states. "There's a gap in the market for shortterm rental but they want to secure revenue over three to five years, which is at odds with their customers."
Falling short of its 2008 targets means there's a surplus of unregistered stock to sell. "We reacted to the downturn in the market three to four months ahead, right back to 2007 when we put the brakes on," Butler reveals.
"Think of the way exchange rates moved last year — 23% increases in costs is what it amounted too. We've got the dealers switched on to selling from what we've got in stock. By April, it should be back to normal levels. But it comes down to the confidence issue," he says.
"We are working with Renault Truck Financial Services on how we can ease the operator's cashflow burden and the dealers have got packages to sell.
"Once we've got over the stock pool it'll be a return to more normal marketing conditions," he says, • • Turn to page 52 to find out how Renault Trucks UK is strengthening its dealer network under Nigel Butler.