Logan: Renault’s Low Cost ‘World Car’

To examine the strategic reasons behind a major auto company’s decision to manufacture a low cost car for developing markets. 

 The Logan was a low cost car developed by French auto company Renault SA. The car, which Renault intended to be its ‘world car’, was developed at the company’s Romanian subsidiary, Dacia. Though originally meant to be sold in markets in the developing parts of the world, the Logan found unexpected success even in countries like France, Spain and Germany, leading Renault to introduce a version of the car for these markets as well. This case discusses the factors that prompted Renault to make a low cost car. It then examines the approach that Renault took towards developing a world car with a pre-designated sale price, and the various ways in which costs were kept low during the production process.                                                                      

It also discusses the launch of the Logan and the subsequent events, which resulted in Renault developing a new version of the car for Western Europe. The case concludes with an analysis of Logan’s prospects, with special reference to potential competition.

Issues:

Q1. To examine the strategic reasons behind a major auto company’s decision to manufacture a low cost car for developing markets.

Q2.  To analyze the reasons behind the success of a low cost car, not only in its target market, but also in the markets it was not intended for. 

Q3. To study the strategy employed by the company in entering new markets.

Q4.  To study the challenges companies face in developing products for emerging markets. 

Q5.  To study the prospects of the low cost car, and to analyze the possible impact of competition in future.

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