Paris-Pitesti: How the Dacia Logan Is Changing the Innovation Rules in the Automotive Industry

Contents

1.        Why might the low-cost market be of strategic interest to the automotive industry?        

2.        What challenges did the Dacia Logan project face in terms of understanding the market and delivering value?        

3.        Why was the Dacia Logan a success in emerging markets and developed markets?        

4.        What risks (including, but not limited to ethical risks) could Renault face in marketing the Dacia Logan and/or other Dacia models? How would you mitigate these risks?        

5.        Future strategic challenges for marketing the Dacia range. Do potential competitors in their markets face the same, or different, challenges?        

1. Why might the low-cost market be of strategic interest to the automotive industry?

The automotive industry, as many industries at that time, was mainly focus in developed markets such as United States and Western Europe. But as we see in Table 1, developed countries are predicted to become steady and saturated, while developing markets would experience positive increases in car sales. Hence, if automotive companies wanted to maintain or increase their profitability, it was mandatory to look for new segments, markets or/and line of products.

At the same time, there is enough external data to support that the growing of the middle class in emerging markets, based on its buyer power and the huge population of these countries, will be an important engine for world economic development and worldwide industries. With a demand that overcomes 500 million people only in Asia (EY, 2013), middle class of emerging market seems to be the next most profitable target.

Regarding the increase of middle class’s buying power, it could be expected that their basic or physiological needs will be covered and they will be motivated to acquire new products to serve their safety needs such as vehicles (Maslow, 2012).  However, their incomes are not enough to buy cars with prices same as those in the developed world. In addition, they are looking for reasonable quality and features that target their expectations which are affordable prices, reliability and durability.