Renault to Create Premium Sub-Brand, After Backing Away From Daimler

PARIS – Renault plans to create a premium sub-brand of some of its models in an attempt to increase profits, Chief Operating Officer Carlos Tavares confirms.

At the same time, he tells The Wall Street Journal Renault is abandoning its 3-year-old luxury-car alliance with Germany’s Daimler. Renault was to help Mercedes make basic small cars and vans, while Daimler would guide the French auto maker in creating large prestige models.

However, the Renault-Nissan partnership with Daimler will continue with other projects already under way that include the development of vehicles and powertrain technologies.

"We haven't found a (luxury-car) business model that works," Tavares is quoted as saying of the partnership. "For now, we haven't seen a good equation. That doesn't mean we won't find it, just that we haven't found it for now."

WardsAuto earlier this month reported Renault was considering developing a sub-brand of “Initiale,” the name used until now to designate the top trim level of some Renault models. But WSJ says the sub-brand will be called “Initial Paris” and begin with four or five models.

The idea is to replicate rival brand Citroen’s successful move upmarket with its DS3, DS4 and DS5 cars that are based on the C3, C4 and C5, but with different bodies and features.

Renault has tried in the past to make higher-end vehicles, but the Vel Satis and Avantime could not find enough customers and production was halted early.

The Grand Espace currently is the most expensive Renault model, starting in France at €37,200 ($48,360) and rising to €53,100 ($69,000) for the Initiale model with automatic transmission and a 174-hp diesel engine.

The high-end Laguna Coupe, Renault’s most stylish car, lists for €46,500 ($60,450), while the largest and most pricy sedan, the Latitude, sells for €49,850 ($64,800).

In contrast, the price of the Mercedes-Benz E-Class in France ranges from €40,600 to €88,100 ($52,800-$114,500).

Renault-Nissan and Daimler say they are working on 10 projects together, including a common platform for the next Twingo and Smart and a compact Infiniti model on a Mercedes platform.

“The problem is…how do we address the upper range?" says Jerome Stoll, Renault’s executive vice-president-sales and marketing, in an interview with WardsAuto at the Geneva auto show last week. “We are working on that.

‘We have a kind of label now with Initiale. We are going to see whether we can define more precisely what the upper range of Renault might be, and to address it more appropriately.”