How Renault hopes to keep customers loyal

Renault Kwid plays the reinvention game to suit changing customer behaviour

In November last year, French car maker Renault announced that Kwid, its entry-level hatchback would now be available in an AMT (automatic transmission) version for just Rs 30,000 more.

Three months later, in February 2017, Renault came up with another variant with an additional set of features (for Rs 22,000 more) and then within a month, announced an all new Kwid Climber with a whole new set of features and accessories and personalisation options.

What is driving the rapid and incessant product upheavals in Kwid?

Kwid is Renault’s bestselling model on Indian roads and has more than doubled its sales in 2017.

It competes with Maruti Suzuki’s Alto, which is the market leader. According to the company, Kwid’s makeovers are a reflection of changing customer behaviour.

The life-cycle of an automobile is drastically down, around two to three years compared to at least five to six years a decade ago.

“The Indian customer wants the latest and the best offerings at accessible prices. It is a tough combination to create and that is driving auto makers to keep tinkering with their products,” the company spokesperson said.

Maruti Suzuki has done the same with Alto, introducing two generation updates and one cosmetic facelift (new colours and accessories) in the past year.

For Dzire, it has been in the changing room far more often. It is a time of facelifts and updates say analysts.

“For an automaker it makes more sense to keep on adding value to the existing product that generates volume for them since it takes humongous investment and extensive research to launch a new product. Moreover, there is always little uncertainty with the traction that a new product will gain,” said Bibhishan Jagtap, an analyst at Emkay Financial Services.

Besides Kwid is Renault’s big success story in India and the company is taking no chances with the brand.

After the launch in September 2015, sensing the potential that the segment and the brand presented, Renault was quick to come up with an upgraded version with a stronger engine.

This was the Kwid 1.0 L variant with a 999cc engine. The latest Kwid Climber is an upgraded version of the same but comes loaded with accessories and graphics options. It is aimed largely at the young, restless car buyer.

Kwid, the company says, taps into the customer’s aspiration for constant upgrades.

“For us, it’s not only important that we want to enter segments where we’re not present, but more important is to try and create sub-segments for ourselves,” said a company spokesperson.

Automakers are selective about the tinkering they do with their brands however. It depends on the category and the consumer. Kwid is targeted at the entry-level buyer who, the company said, want the latest and the best at an accessible price.

“We have to constantly keep pace with customers’ expectations,” the spokesperson said.

Kwid has a clearly defined target in the young urban car buyer. It is with this target in sight that the company appears to have crafted its ‘Live for More’ collection offering vehicles in colours such as fiery reds, outback bronze and so on.

It also lets buyers personalise the car using one of its seven new body graphics options.

The strategy seems to be working as Renault claims it has received 1,000 bookings and over 10,000 queries within a week of adding these options.

Kwid contributes over 80 per cent of Renault’s total sales volume of Renault in India. In 2016 Renault grew by 145.6 per cent recording total sales of 132,235 units, Kwid alone sold 105,745 units.

Rising numbers have also resulted from the company’s expanding footprint.

From 14 dealerships in 2012, Renault has expanded to 270 in 2016. It plans to take the number to 320 outlets including both tier-I and II cities by the end of this calendar year.

Renault also says that it has managed 98 per cent localisation of the product and that lets the company stay competitive, especially since it is up against the biggest price warrior on Indian roads, Maruti Suzuki.

Maruti’s Alto is currently the leader in the segment.

Alto sold 241,635 units for the year 2016-17 while Kwid sold 109,341 units. Maruti had undertaken three major updates in Alto so far and it also has a variant under the Alto brand called ‘Alto K10’ that has more engine power.

In India the hatchback contributes over 70 per cent to the total car sales. It is a cluttered segment and perception plays a big role in driving sales in this category say analysts.

“It is important for automakers to build customer perception for their brand,” said Bibhishan.

Apart from trying to create a buzz around the brand through a string of changes, snazzy colours and offers, Renault says it will launch a model a year under the Kwid label.

It is also experimenting with promotion and distribution platforms. It has tied up with Paytm for online booking options and launched a mobile showroom called ‘Passion on Wheels’ across 300 cities to reach customers in small markets.

Last year they also launched ‘Workshop on Wheels’ which is a mobile workshop service that provides door-to-door service to Kwid owners in remote areas.

Photograph: Anindito Mukherjee/Reuters