When the Americans think about copying the French, something interesting is happening. General Motors, America's largest carmaker, may emulate Renault's strategy of selling basic but rugged cars at cutthroat prices. It will be a big task.
The source of envy is Dacia, the French group's Romanian subsidiary. It makes some of the least expensive cars in Europe - the 5,995 pound Sandero is Britain's cheapest car. It is also the fastest-growing brand in the region. In six years, Dacia's market share has almost tripled, to 2.9 per cent.
Renault doesn't disclose Dacia's profitability. But Barclays analyst Kristina Church estimates the brand will earn an operating profit margin of eight per cent in 2014. That's just a little lower than BMW and Audi, and four times more than Volkswagen's passenger cars unit.
Barclays reckon annual operating profits exceeding 1 billion euros make Dacia Renault's main profit engine.
Dacia has found a low-cost way to do everything reasonably well. The Sandero, which costs 46 percent less than the entry-level Volkswagen Polo in Britain, still received four out of five stars in Europe's NCAP safety rating.
How? Well-proven technology from older Renault models reduces R&D costs. There are far fewer choices on colour and equipment. Romanian factory workers earn 4 euros an hour, an eighth of the euro zone average. And Dacia sweats the details, like saving on cable costs by putting power window switches in the centre console rather than in the doors.
All this means Dacia's production costs are 25 per cent to 30 per cent lower than mass-market peers, estimates Christian Kleinhans, a consultant at Berylls Strategy Advisors. Then there are savings on marketing and distribution: online ordering and frugal dealer incentives.
Dacia's European success was a surprise. The cars were originally designed for poorer markets, where they are sold as Renaults.
But cheap, safe and reliable vehicles have wide appeal. Competitors are jealous, but Dacia has a big head start. GM lacks a low-cost European manufacturing base. Chinese rivals struggle to match Dacia's value proposition.
Higher Romanian wages and tighter safety and emission standards could eventually dent Dacia's profits. In the meantime, though, Renault's shareholders are in for a nice ride.
