Recent reporting on Renault Trucks has focused on the way the business has started merging some admin and back-office functions with its parent company Volvo Trucks (Commercial Fleet, February 2016) after operating largely as a separate entity for the previous 15 years of ownership.
The move makes sense as a way to pool resources, reduce overheads and exploit each organisation’s strengths when deciding on the best way forward.
But arguably a more fundamental decision for the UK was taken in 2015 – certainly one having a more immediate impact on business – when Renault Trucks decided to segment its British operations into two divisions: trucks and vans.
Through a quirk of its former parentage, Renault Trucks retains the right to sell Renault vans branded with its Truck logo (an identical diamond but on a red background). By creating a dedicated division, headed by LCV brand manager Richard Chamberlain, it is now able to give greater attention to growing this part of the business.
Initial signs are positive: van sales have risen by almost 30% so far this year, albeit from a low base, by proactively targeting customers and improving engagement with the dealer network. Conversions, in particular, are proving popular, with chassis cabs fuelling much of the growth.
Meanwhile, truck orders have also risen by more than 60%, with deliveries up almost 20% year-to-date, in a market up by a similar proportion.
Nigel Butler, Renault Trucks commercial director, explains the strategy: “We set out to find long-term customers. We now have a consistent approach to the market.”
He is looking to build on a brand position rooted in robust products, customer service and the environment with new initiatives and business processes designed to fulfil the
“We are looking for customers that value our service proposition,” Butler says. “Our vehicles are more reliable if they are serviced through the franchised network which means better uptime and earns more money for customers.”
Renault Trucks has a range of vehicles from 2.8 tonnes to 44 tonnes available at dealerships which now specialise in vans as well as trucks. Over the past couple of years, the market has been buoyant at all weights, although Butler anticipates a levelling off in the heavier sector, above 16 tonnes, this year, while the medium-duty six-to-16 tonnes sector continues to rise. Registrations of mid-size trucks are still, though, at just 60% of the pre-recession market.
There has been noticeable polarisation, which has seen buyers exit the 7.5-tonne sector in favour of upsizing to 12-tonners or downsizing to vans. Butler has also seen some 18-tonne customers move to 26 tonnes, and some 26-tonners upgrade to tractor units.
“The pressure is on the medium sector – it probably won’t get back to the levels it used to be at,” he says. “The licence changes mean there is a shrinking pool of drivers so it is easier to go for 3.5-tonne vans, which are more manoeuvrable for home deliveries.”
He describes the renewed focus on vans as a “step process” which is seeing the truck and van teams work more closely together, with the right level of resource and better communications.
At present, up to 70% of Master buyers are existing truck customers, a business built from truck fleets that weren’t happy with the aftersales offering from van dealerships. That proportion will fall as Renault Trucks starts to attract new customers to the brand.
It’s the aftersales offering that Butler believes gives Renault Trucks the edge over Renault UK – as well as other truck makers – and will help to persuade more fleets to buy their Masters at its dealerships. It’s crucial because it impacts
“Aftersales is our key differentiator,” Butler says. “We understand the marketplace and have solutions that meet their requirements. For example, you can drop off at 7pm and pick up at 7am – we can meet downtime requirements with our 24/7 proposition.”
According to Butler, van fleets can face delays of up to a week before their vehicles are fixed because they are a lower priority at car-focused dealerships.
“We have a commercial offer with KPIs: 84% of vehicles are back on the road within six hours,” he says.
Chamberlain adds: “We also go out to the vehicle at the roadside to try to get it back on the road. We have uptime solutions for customers.”
Renault Trucks is about to launch a leasing offer for van fleets that will help to drive volume. It is also looking to replicate its truck maintenance and repair products for vans and will launch a complete package in the next couple of months.
This will “take away all the repair headaches”, says Butler, by covering everything that isn’t included in the service contract. It is all part of his focus on fixing the total cost of ownership for customers.
He recognises that Renault Trucks also needs to offer a broader range of support services. This may include extending its one-day driver training to vans; it almost certainly includes a more extensive vehicle handover process. “The vehicle handover is important to us,” Butler explains. “We take the driver round the vehicle and also talk about efficient driving, how to get the best fuel performance and how to minimise wear-and-tear on the vehicle.”
From September, Renault Trucks will introduce a ‘train the trainer’ initiative to enable fleet operators to undertake their own driver education. Demand is likely to be concentrated in the truck side due to companies here operating high capital investment businesses with low margins.
“Their biggest cost is fuel; I can help them to manage that,” Butler says.
A new driver eco scoring service will complement the training. It will be free of charge to truck customers who purchase the OptiFleet telematics package and is intended to provide exception reporting based on fuel consumption. Over the next couple of years, the service will be rolled out to van operators.
Despite its growth aspirations in van, Renault Trucks is not “hung up” on market share, says Butler. He sees Masters as an add-on to the overall business, one which gives customers a one-stop supply solution.
The company is on track to top 1,000 Master sales this year, with orders up 50% on 2015. That’s only around 12% of the 8,000 Masters Renault UK is likely to register this year, but Butler reiterates his position: “We won’t buy market share; it needs to be sustainable growth.”
He recognises that Renault Trucks has a big awareness job to attract fleets whose vans are part of their core offering; most customers are running small numbers of vans alongside their main truck fleets.
Nevertheless, it has started to win business with customers which operate several thousand vans, particularly where they have a need for complex conversions. Renault Trucks offers a range of pre-converted vehicles, including tippers, dropsides and Lutons, under its Ready for Business initiative.
It is expanding this to curtainsiders and has also produced cherry pickers. This capability is vital when 60-65% of vans are undergoing some form of conversion.
“Our knowledge and support are critical when it comes to converted vehicles,” says Chamberlain.
For Butler, success will come down to one key business priority: “To win business I have to be better than my competitors to help customers to be more efficient and profitable.”
Fleets move towards short-term contracts
Nigel Butler has seen a drive in the truck sector towards shorter-term contracts, typically three to five years, as fleets begin to mirror the contract terms they are getting from their customers.
Often they are inserting break clauses, while spot hire is playing a more dominant role. Renault Trucks has the flexibility to cater for all needs via its two funding divisions: Renault Trucks Financial Services, which finances 35% of its truck sales, and BRS, which accounts for 30%.
Combined, Renault Trucks is funding up to 65% of its registrations in-house. Ironically, the proportion is falling as banks, post-recession, start to return to the market. “We used
to do a lot of four- and five-year contracts; now the demand is for two- and three-year contracts,” Butler says.
This trend has increased the need to recycle vehicles into the used truck market, something Renault Trucks handles via its own used operation.
It takes a two-tier approach: tier one is for retailable trucks, typically with less than 500,000km on the clock, which are tidied up and sold with a warranty; tier two is for older trucks which could be exported or traded out.