1. Corporate Strategy – B14
C ASE : M ATRA AUTOMOBILE
Name Roll Number
Pallavi Waghmare 08927814
Prasenjit Debdas 08927855
Joytsona Hansda 08927884

2. 2 M ATRA M ODELS

3. 3 AGENDA
 BACKGROUND
 REASONS BEHIND SUCCESS OF ESPACE IN
THE 1990s
 REANAULT-MATRA ALLIANCE
 PROSPECTS OF SUCCESS FOR AVANTIME
AND m72
 STRATEGY TO MATRA FOR THE FUTURE

4. 4 B ACKGROUND
 Started in 1964
 Matra was to cover both motor racing and
passenger cars.
 Involved in motor racing for 10 yrs, then withdrawl
 Success- Le Mans, Formula 1
 Passenger car business was less succesful
 Matra decided to launch a totally original vehicle –
single body family car- Espace.

5. 5 M ATRA M ODELS
 1965 Matra 530- unreliable quality , bad after
sales service
 1973 Matra – Simca Bagheera- underpowerd
unable to convince its target
 1977 Matra – Simca Rancho
 1978- Peugeot Citroen took over Chrysler France
 Simca cars were renamed as “Talbot”.
 1980 Talbot-Matra Murena-total failure

6. 6 C ONTD .
 1984- Espace 1
 1991- Espace 2
 1996- Espace 3
 2001- Avantime
 2002- M 72

7. 7
M ATRA R ENAULT A LLIANCE
 Matra- manufacturing car‟s body and final
assembly
 Renault- distibutor, supply car‟s platform,
mechanical components to Matra
 The product‟s techinal modifications were to be
decided by Matra.
 Actual sales were compared with contractual
volumes on a yearly basis.
 1984-2002: Espace 1, 2,3
 Initial contract ..56,000 units – 5 years

8. E UROPEAN M ARKET F OR
8
M INIVANS
 30% Users were women
 65% were young people(35-49)
 62% had university degrees
 Large families(4.4 persons per household
on avg) were main purchasers.
 75% of Espaces sold- 7 seaters, 25%- 5
seaters

9. S UCCESS OF E SPACE IN THE 1990 S

10. C OMPETITIVE A DVANTAGE
Matra Renault
 Design experiences in racing
Design &
 Low cost and short term
development
development
 SMC production technology
 Various mechanical
Production  Utilization of outsourced
components
components
 Brand
Sales and
 Dealers and service centers
After sales
in Europe

11. 11
SUCCESS OF E SPACE IN
1990 S
• Created a new Vehicle category-MPV (Multipurpose Vehicle
MPV Segment)
• Modular Internal Layout
• Limited length
• Flat Floor
Design • Raised Platform for Driver‟s seat
• Untraditional
Image • Catered to demand for modular, comfortable, compact cars.
•Renault provided strong marketing support
Alliance •Positioned it as top-of-the range vehicle.

12. 12 C ONTD ….
• Designed to carry up to seven passengers while having
Differentiation the same size chassis as an average sedan car
• Low volume production at competitive cost, through
Cost
Structure
SMC technology
• Technological advanced design compared to
Technologica
l competitors
Competency
• Renewal Rates- 80% in 1990 and 70% in 1994
Customer
Loyalty

13. H OW DID ESPACE ’ S PROFITABILITY
EVOLVE OVER TIME

14. 14 M ARKET S HARE IN E UROPE
Number of Monospace Minivans registered annually in Europe (Appendix-2)

15. 15
E SPACE -I (1984-1991)
Profit
11.5%
Contract
revision
•Repositioning by Renault as „Top-of-the-range‟ article
•1985 – 70 units/day
•1986 – 100 units/day
•Record profitability rate

16. 16 E SPACE -II (1991-96)
• New Market Segment – „Monospace Minivans‟
• 1992 – Net Earning - € 76 m
• 1993-94 – Profitability of 9%
Year Sales Net Earnings
(€ mn) (€ mn)
1993 806 73
1994 898 77
1995 796 53
Appendix -8 , Lagardere Automobile

17. 17
E SPACE -III (1996-2002)
•Increase in competitive pressure
•Despite Fierce competition, Renault sold 350,000
units between 1996-2002
•Matra Auto
Year Sales Net Earnings
(€ mn) (€ mn)
1997 1070 34
1998 1123 37
1999 1143 42
2000 1183 50
2001 1141 33
Appendix -8 , Lagardere Automobile

18. 18
E SPACE -III (1996-2002)
• RENAULT Year Sales Net Earnings
(€ mn) (€ mn)
1997 25274 300
1998 29739 1307
1999 29738 768
2000 31486 NA
2001 33841 NA
Appendix -9 , Renault Passenger Cars
E SPACE -IV (2002-)
• Annual sale target of 100,000 units

19. RENEWAL AND FINAL WITHDRAWAL
FROM ALLIANCE BY RENAULT

20. 20
P ORTER ’ S F IVE F ORCE
A NALYSIS
Substitutes
Substitutes
Minitrucks
Sedans
Supplier
-Long term contracts.
- Huge quantity orders and at fixed
contract prices
Suppliers Competitors Customers
Customers
Competitors Loyal customers to Espace, high renewal
• Very low competition for initial 10 rates 80% in 1990 & 70% in 1994
years,Chrysler Voyager was the only Less bargaining power
one in 1988.
•1994 PSA and FIAT –Peugeot New Barriers for New Entrants
806,Citreon Evasion,Fiat Entrants •Technical Knowhow – design
Ulysse,Lancia Zeta. •High investments
•1996 Scenic from Renault.

21. 21
R ENEWAL OF M ATRA -
R ENAULT A LLIANCE
Renegotiation of alliance with Matra by Renault for Espace 2
covering 120,000 units over 1991-1995
High Entry ticket for large lot manufacturing of Espace
Daily output of 1,000 units would have cost €1 bn.
Renault Sold American Motors to Chrysler in 1987
Failure to gain control in United States Automobile market

22. 22 C ONTD ….
Attempt to find successor to Espace-II
Prospect for alliance renewal based on competitor‟s project details
Battle between Renault‟s Project J66 and Matra‟s P52 ,won by Matra‟s P 52
Exogenous Factors
•Renault-Volvo Merger Failure
•Renault’s decision to launch J64 project resulting in reduced commercial potential of J-66
RENEGOTIATION OF MATRA-RENAULT ALLIANCE FOR ESPACE
3 IN MAY1993 FOR 330,000 UNITS OVER 1997-2001

23. 23
WITHDRAWAL FROM
ALLIANCE (E SPACE -IV)
Counter-offer by Matra of daily
production 400-450 units using Refusal of offer by Renault-
Renault-Demand of daily SMC Technology because WITHDRAWAL from alliance
output 600 units of Espace-IV
Romorantin plant would no Espace 4 –steel body and 100%
at € 2,300 less price using
longer be competitive made at Renault’s
sheet metal production
Fear of losing out to sheet Sandouville’s plant
metal production by Renault

24. PROSPECTS OF SUCCESS FOR
AVANTIME AND M 72

25. 25
Prospects of Success
m72
Aventime -Could be used by family members to meet their
personal needs
- Innovativedesign of -Streamlined appearance –thus leading to low
„Coupspace‟- attracted hi-tech production costs.
product loving young -Liberalization of Automobile trade in Europe
-A new innovative product aimed at a new market– a
population minimal car for around € 6000
- Preferred by adventure loving -Matra‟s innovation: Direct contact with end users
consumers and garages throughout Europe leading to reduction
in distribution costs.
- leverage upon loyal Espace
buyers - Dealers got a commission of 6% whereas traditional
automakers usually gave their dealers around 15%
on the pre-tax retail price.
- Mutipurpose vehicle

26. STRATEGY TO MATRA FOR THE
FUTURE

27. 27
C REATING S TRATEGY FOR
M ATRA A UTOMOBILES
Problems Faced by Matra
Potential Change in
Loss of its Reluctance of big
automobile
Competition Car makers to
Espace brand; entrust Matra
production
for Avantime policies
conceded to with advanced
& M72 cars „Platforms &
Renault due projects because
from big car of production
Modules‟
to severity in reduces
makers tools used which
their subcontracting of
including are too
relationship „Craftsman-like‟
assembly
Renault operations

28. 28
S TRATEGIC A LTERNATIVES
AVAILABLE
Developer
working on cars
Creator of manufactured
Concepts by others
Manufacturer
of Automobiles

29. 29
S TRATEGY-F OCUSED
D IFFERENTIATION
• Matra should focus on narrow market niche where
buyer needs & preferences are distinctively different.
Strategic Target • Aim at developing core competency (SMC
technology) i.e. concept creation & manufacturing
rather than providing service in whole value chain.
Basis of
competitive • Attributes that appeal specifically to niche members
advantage
• Communicate how product offering does the best job
Marketing of meeting niche buyers expectation.
Emphasis • Choose a suitable partner (big car makers like FIAT,
Chrysler) to gain access into International Market.

30. 30 C ONT..
• Products that match the taste and
requirement of niche members.
Production • For higher market share (higher
emphasis production level), need to move to sheet
metal mfg because of high variable cost
in SMC.
• Start a new collaboration with other
Factors to
manufacturers
• Matra strength (core competency) lies in their
design and engineering
sustaining • Should use this strength to start automobile
engineering services
strategy • Improve their branding and marketing
• Increase their production capacity to realize
economies of scale at higher production levels
• Invest to start a new plant for metallic frames
• Improve their distribution and after sales service

31. 31
W HAT HAPPENED TO M ATRA
AFTERWARDS ?
Matra automobiles closed in April
2003 owing to bad sale of Avantime
brand
After 40 years of creating innovative
cars, Matra Automobile's factory at
Romorantin in central France closed
Matra's design and engineering
section was sold to Italian design
and coachbuilding specialist
Pininfarina

32. 32
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