Beyond income, can you see other barriers to selling cars to consumers in developing countries where 80 percent have never owned a car? Be as specifi c as you can about the consumer behavior–related barriers, including culture, values, new-product adoption, etc.

In 1999, Renault bought Romanian automaker Dacia.
The idea was to retool the plant and manufacture an ultra-low-priced automobile that would be attractive to consumers in developing countries where 80 percent have never owned a car. Renault’s chairman at the time, Louis Schweitzer, indicates that he had . . . always been slightly nervous about the constant escalating costs of ordinary family cars. Adding more and more features just pushed up costs with no real benefi t for buyer or carmaker.
The move was a bold one. Consider that in 1999, with gasoline prices still in check, consumer demand was still high for larger and more powerful automobiles. And cars often are an important status symbol for at least some consumers.
Many luxury brands continue to tap this “aspirational”
market with lower-priced versions of their luxury brands. These aspirational buyers pay a lower but still hefty price for the status of owning a luxury nameplate.
Renault’s Logan is anything but luxury. However, it is a well-designed, reliable, and easy-to-repair car. It is a roomy sedan that can seat fi ve people, but has simple design features, such as a fl at windshield, minimal electronics, a single-piece dashboard, and so on to reduce manufacturing costs. Simple, low-cost manufacturing that can be executed in factories located in countries like Russia, Morocco, Colombia, and Iran has been the goal, since production close to their key markets also reduces costs.