Thursday, March 3, 2011

Internet Sales, the Next Big Thing for Renault's Dacia and PSA’s Rumored Simca Budget Brands

A low-cost company has to find low-cost ways not only to produce, but also to market and sell its products. This is why Renault devised a strategy to sell Dacia models online, through an Internet sales program that will be implemented in Europe.

“Internet sales will quickly become a reality. Many of our customers know what they want before they step into our showrooms, so an online sales channel makes sense,” said Gerard Detourbet, head of Renault's low-cost program.

But that isn't the only reason. Renault will be soon facing the threat of a low-cost rival coming from the French group PSA Peugeot-Citroen. Rumored to receive the abandoned Simca name, the new make could sell its vehicles exclusively through the Internet, as sales chief Jean-Marc Gales hinted at the Geneva Motor Show.

According to Gales, the cars will be built outside Western Europe, possibly in China, and could bring a higher profit margin for PSA than any other low-cost car manufacturer has managed to obtain until now.

"They're all selling cars at lower prices through the same high-cost distribution system that hasn't changed in 90 years. What we're talking about is a radically new approach to car distribution," said Gales. He added that cars will be sold exclusively through the Internet, with test-drive vehicles being offered through rental firms.

In doing so, PSA will not only increase profits, but will also avoid potential damage to the Peugeot and Citroen brands by keeping low-cost cars away from the showrooms.

By Dan Mihalascu

Source: Bloomberg


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