In a difficult economic climate, Renault has been able to adapt to changing consumer demands. Its ability to offer more economical product offerings to its European consumer base has helped it maintain its competitiveness while also transforming its organizations. Renault has been able to implement a low-cost strategy by instituting more simple auto designs and focusing on simplicity, ease of manufacturing, and availability. This approach has increased its profitability and market competitiveness. Read the case below and answer the questions that follow. The European economic crisis has changed how Renault, a French carmaker, designs and produces cars for European customers. Historically, European car buyers have been sophisticated, demanding well-designed, feature-laden cars from manufacturers. When the economic crisis hit Europe in 2007, automakers saw a dramatic shift in demand. Overall demand dropped, and the customers who did come in to buy became much more cost conscious. In these difficult conditions, Renault has been able to carve out a profitable market for itself, selling low-cost, no-frills cars. Renault responded to this shift by creating an entry-level car group that was charged with designing and producing cars for these more cost-conscious consumers. For example, it took an ultra-cheap car, the Logan, that was originally aimed at emerging markets, and redesigned it to meet the new needs of the European market. The boxy sedan, which sells for around $10,000, is now one of Renault's best sellers. Its entry-level cars accounted for 30 percent of the cars sold by Renault in 2011 and generated operating profit margins over twice the profit margins of the higher-priced cars Renault sold. What is the recipe for success Renault has found to generate high profits on low-price cars? It uses simple designs that incorporate components from older car designs at Renault and employs a no-discount retail policy. At the center of its design procedure is a "design-to-cost" philosophy. In this process, designers and engineers no longer strive for the cutting edge. Instead, they focus on choosing parts and materials for simplicity, ease of manufacturing, and availability. This often involves using components that were engineered for prior vehicle designs. When needing a new component, Renault begins by assessing how much customers would be willing to pay for certain features, such as air conditioning or power door locks, and then asks suppliers whether they can propose a way to offer this feature at a cost that matches what customers are willing to pay. As it faces imitation of this strategy by Volkswagen and Toyota, Renault is not sitting idle. As Carlos Ghosn, Renault's CEO, stated, "Our low-cost offering isn't low-cost enough. So we're working on a new platform that will be ultra low-cost." Sources: Pearson, D. 2012 Renault takes low-cost lead. wsj.com, April 16: np.; and Ciferri, L. 2013. How Renault's low-cost Dacia has become a "cash cow." Automotive News Europe, January 3: np. How did the economic crisis in Europe impact automakers?