With better-than-expected sales figures, the Renault company's cheap Logan sedan, built in developing countries for developing markets, is proving a hit in developed nations as well.
The 100,000th Logan rolled off the assembly line at Pitesti, Romania, the first production site, this month, and Renault said it was exceeding its most optimistic sales targets both in Romania and abroad. World sales in the first six months of this year exceeded 79,000, the company said.
Customers have to wait at least three months for delivery, and the company said it was struggling to increase production in Romania to meet the unexpected demand -- the question was when and how, according to the company's commercial director, Patrick Blain.
"It's really on the right path," Blain said. "It has started off better than we expected."
By the end of this year, Renault plans to expand production to new sites in Russia, Morocco and Colombia and put the car on sale in about 30 countries, including eight in Western Europe. Further ahead were plans to open plants in Iran next year, India in 2007 and China eventually.
Renault designed the car as a world model with global sales of one million by 2010, but according to Blain that figure may have to be revised upwards if the initial success of the car continues.
The Logan is a mid-sized, family sedan designed to sell in emerging markets for about 5,000 euros (US$6,000). Even with anti-block brakes and other safety equipment required by EU legislation, the car retails in France for about half the price of a similarly sized and equipped automobile built in France.
Since the Logan went on sale in France one month ago -- priced at 7,500 euros for the basic model to 8,500 euros for the high-end version with power steering, onboard computer and air conditioning -- nearly 700 have been delivered and the company has booked 5,000 orders.
Even with zero advertising and minimal promotion, Blain said Renault had been surprised by the success of the car in the French market. One union member said that the company was not promoting the car more aggressively because it feared that it would eat into the sales of other Renault products.
So far the impact on sales other cars has not been noticeable since the Renault Group sold 1.34 million vehicles in the first quarter this year, and said earlier this month that it boosted worldwide sales by 3.6 percent even if markets in Western Europe remained stagnant.
Renault says that the Logan will not compete with the company's higher end autos, but with other low-cost cars being made in Asia, Eastern Europe and developing countries, such as the made-in-Brazil Volkswagen Fox.
Other manufacturers are expanding operations in eastern Europe to take advantage of the low labor costs there and a relatively affluent market in western Europe. They include France's domestic rival, PSA Peugeot Citroen, and the Kia division of Hyundai of South Korea, both of which have established factories in Slovakia.
The Logan appears to appeal to young people and pensioners who might otherwise have bought a second-hand automobile, to families in need of a second car and to rural dwellers more than city inhabitants. Some buyers say they were attracted by the car's relative simplicity and lack of electronic gadgetry.
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