Renault is one of the top two car and light commercial vehicle brands in Western Europe, but until recently it had only a minimal presence outside that region. However in a few key deals in 1999 and 2000, Renault transformed itself into a global force with substantial operations in Asia and a strong footprint in North America. Where once there was only the Renault brand, the group now controls Japanese marque Nissan, as well as Dacia in Eastern Europe and Samsung Motors in Korea. In 2007, the group also agreed an important strategic partnership with Russian manufacturer AvtoVaz, which gave Renault effective management control of the widely known Lada car brand. In 2010, Renault agreed a global cooperation partnership with Daimler, covering small cars and light commercial vehicles. Since then though, like all mass-market auto manufacturers, and especially those over-exposed to the struggling European market, Renault suffered steep falls in sales, before finally scraping a recovery in 2014.
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Adbrands Weekly Update 12th Jan 2017: Early estimates appear to show that Volkswagen Group has shrugged off the effects of the "Dieselgate" emissions scandal to seize the top spot among global manufacturers. According to preliminary figures from researcher Focus2Move, the German giant's total light vehicle volumes rose 1.4% to a record 10.1m vehicles, putting its slightly ahead of Toyota, flat at 9.95m. Combined sales of 8.51m vehicles put Renault-Nissan in 3rd place, with Hyundai-Kia 4th at 8.18m. US groups GM and Ford came 5th and 6th respectively, with Honda, Fiat Chrysler, PSA and Suzuki rounding out the Top Ten.
Adbrands Weekly Update 18th Feb 2016: There was a management shuffle at Renault in the wake of Jerome Stoll's retirement. His role of group chief performance officer goes to former Europe chief Stefan Mueller. Ken Ramirez, previously UK MD, becomes SVP, sales & marketing for the G9 top markets in Europe. The group also relaunched its famous Renault Alpine sportscar marque. Although it has continued to use that badge for its motorsports programme, the Alpine brand has not been marketed to consumers for some 20 years. Group marketing director Michael van der Sande was named as managing director of Alpine. Those changes were accompanied by strong results for 2015. Revenues rose by more than 10% to E45.33bn. Impressively, unlike many other Euro-denominated companies, almost none of that gain was the result of exchange rates; instead it came from growth in sales and pricing, and cuts in expenses. Better still, net income soared by over 48% to E2.96bn, despite a big write-off against operations in Russia.
Adbrands Weekly Update 17th Dec 2015: Renault and Nissan and the French state agreed a three-way stability covenant to resolve growing concerns at both auto companies over state interference in their governance. The fears had been prompted by the government's move earlier this year to increase its stake in Renault, in defiance of the latter's board; a move that would potentially give it more than 30% of Renault's voting shares under new company regulations. Renault is in turn the biggest single shareholder in Nissan, with 43%. However, under the new covenant, the state has agreed to cap its voting stake in Renault at under 20% other than in certain exceptional circumstances. At the same time, a new contract was agreed to guarantee non-interference in Nissan's self-government: the Japanese company was granted rights to acquire additional shares in Renault if it believes the French company is unduly interfering in its business. Currently, its cross-holding is limited to 15% of non-voting shares. While this agreement has calmed the waters for now, it has also prompted further questions regarding a full merger of Renault and Nissan. Not yet, said Carlos Ghosn, who is CEO of both companies. "It might one day make a lot of sense," he told reporters, "but certainly not today. I don't think we're ready."
Adbrands Weekly Update 23rd Apr 2015: Friction between carmaker Renault and the French government, its biggest shareholder, increased this week. Renault says the state's attempt to force through the Florange law that would double its voting power over the carmaker puts at risk the French company's immensely valuable partnership Nissan. As a legacy of its 1999 bailout of Nissan, Renault has a 43% voting stake in its much larger partner, while the Japanese company's 15% holding in the French business has no voting rights. Florange would potentially give the French state undue influence over the affairs of both Renault and Nissan, a factor that has alarmed the Japanese company's board.
Adbrands Weekly Update 9th Apr 2015: The French state has spent up to E1.2bn to increase its stake in local automobile giant Renault from 15% to 20%. The increase is expected to be only temporary, so that the government can force Renault to accept a new French corporate law that will allocate double the voting rights of shares in all local companies if held for more than two years. The Loi Florange was introduced to incentivise long-term investment, and applies automatically unless specifically voted down by each company. Like several other large French groups, Renault wants to maintain the traditional one share one vote system and has passed a resolution to disapply the law against the state's wishes.
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Free for all users | see full profile for current activities: In 1998, Renault celebrated its 100th anniversary with a procession of more than 650 historic Renaults through Paris. A century earlier, the 21 year-old Louis Renault astonished a family friend by driving a three-wheeled "voiturette" that he had built himself from scratch up a steep hill in the city's Montmartre district. The friend was so amazed that the vehicle could manage the slope that he ordered one the same day. By the end of the day, Renault had a further 12 orders. With backing from his brothers Fernand and Marcel, Renault Freres was set up in 1899, and was turning out 70 cars a year by the beginning of the new century. The key to Renault's designs, and to the success of his business, was his patented direct drive transmission, quickly adopted by all other manufacturers.
Marcel and Louis reinforced the success of their cars by winning a series of well-publicised contest races (although Marcel was killed in a 1903 crash). In 1905, the fledgling business won a bulk contract to supply Paris taxis, and the company really took off. Manufacturing bases were quickly established in the UK, Germany and the US, and the company exported its vehicles as far afield as Tokyo, Buenos Aires and St Petersburg. In 1908, Renault diversified into aircraft manufacture, and the following year Louis bought out the business from his surviving brother Fernand, absorbing Renault Freres into the newly formed Societe des Automobiles Renault (SAUR).
In 1914, with the outbreak of the First World War, Renault left its mark on French history when 1,200 Paris taxis were requisitioned to transport soldiers to the front at Marne, where the allies won their first victory against Germany. Later, Renault turned its hand to tanks and shells. By 1919, Renault was France's biggest private industrial company. But in the economic devastation which followed the war, Renault was quickly overtaken by American manufacturers who set up new bases in Europe. In response, Renault widened its range to produce everything from budget models to limousines.
The Second World War proved a catastrophe for the company. During the German occupation of France, the Renault factory was placed under the control of Daimler Benz, although Louis Renault remained as manager. Repeatedly bombed by the allies, the plant was almost completely destroyed in 1944. Renault himself was arrested in September 1944 by the invading allied forces for collaborating with the Nazis. He died in prison a month later, and his estate was confiscated.
After the liberation of France, Renault was nationalised and quickly regained the substantial ground lost during the war. By 1952 the company was turning out 100,000 vehicles a year, then 500,000 by the mid-1960s as sales took off in the US and around Europe. The company was famed for its small affordable cars, typified by the Renault 4 in the 1960s and the Renault 5, launched in 1972, which went on to be one of its best-selling models ever.
In the 1970s, Renault set its sights on the American market, buying a small stake in ailing US manufacturer AMC, and negotiating a cooperation deal with truckmaker Mack in 1979. The following year, Renault took effective control of AMC, which began to manufacture the Renault 9 and Renault 11 for the American market, renamed the Alliance and the Encore. In 1983, the company took over Mack as well. By this point, the US had become Renault's biggest export territory. However, the cars failed to take off with American consumers, particularly in the face of strong competition from Japanese models. By the mid-1980s, Renault was generating huge losses in North America, with group debt reaching a colossal 57bn French Francs in 1984. Some welcome good news came with the successful launch in Europe of the Espace, effectively the first modern MPV, in partnership with industrial group Lagardere.
To resolve Renault's financial problems, new chief executive Georges Besse instigated a huge restructuring in 1985, shedding 21,000 staff, and selling off smaller non-core subsidiaries. But the company's troubles escalated when Besse was murdered the following year by terrorist group Action Directe. Restructuring continued under successor Raymond Levy, who took the tough decision to sell the AMC stake to Chrysler and effectively pull out of North America in 1987. Car rentals business Europcar was sold to hotel group Accor the same year, and Renault was able to report record profits by 1988. During the 1990s, as a result of problems in its trucks division, Renault began a close liaison with Sweden's Volvo. Substantial share-swaps between the two companies were the prelude to full merger, but the plan was eventually vetoed in 1993 by the Swedish company's shareholders, who feared that their interests would be overshadowed by the French giant. In 1996, the French government privatised Renault, although it retained a 46% stake. That year the group made a loss as a result of restructuring and the sale of its holdings in petrol station chain Elf Aquitaine and Volvo cars.
Despite its occasional international interests, Renault was to all intents and purposes a European manufacturer in 1998. Then ranked 10th worldwide by sales, almost a third of the company's vehicles were generated in France, with Western Europe as a whole contributing 83% of sales. It was time for a change. In 1999, Renault leapt back into the global market as the white knight to rescue struggling Japanese carmaker Nissan. Much bigger than Renault, Nissan was then the world #6 by unit sales. But the Japanese company was struggling under the burden of declining market share and a huge debt, estimated at up to $21bn. Renault offered to buy a 35% stake in Nissan for around $6bn. The French company took effective control of the business, installing its own senior management team in a bid to turn around this drifting giant.
Not content to stop there, a few months later Renault acquired the Romanian government's 51% stake in Dacia, that country's biggest auto manufacturer, for around $50m. (The stake was increased to 73% in 2000, then to 92% in 2001). Another piece in the eastern European jigsaw was slotted into place with the agreement of a deal between Irisbus, a joint venture formed by Renault and Fiat's Iveco subsidiary, to acquire a controlling stake in struggling Hungarian busmaker Ikarus. (Renault was later obliged by regulators to sell its stake in Irisbus to Fiat). In 2000, Renault consolidated its position in Asia with the takeover of Korea's failed Samsung Motors. Renault had been negotiating for some months with the car business's parent, Samsung Group, attempting to resolve the question of the Korean company's substantial debts. They finally settled on a price of around $560m for a 70% stake in the Korean car company. The Samsung group retained a 20% stake, while creditors took 10%. The deal made Renault the first foreign car company to break into the hitherto protected South Korean market.
At the same time, Renault pulled out of the trucks business, selling its entire trucks division, including Mack and Renault VI to Volvo for E1.7bn ($1.6bn). Under the terms of the deal Renault also took a 20% shareholder in Volvo. In 2001 Renault and Nissan strengthened their alliance when Nissan agreed to acquire a 13% stake in the French company (now 15%), while Renault exercised options to increase its stake in its Japanese partner to 44%. However both companies denied any intentions to merge completely.
In summer 2006, Renault-Nissan CEO Carlos Ghosn gave his support to an ambitious proposal by maverick US investor Kirk Kerkorian to force ailing American giant General Motors to join the Franco-Japanese alliance. The US group agreed reluctantly to consider the plan, and several discussions took place with Renault. However, talks were eventually ended in October 06 when it became clear that no satisfactory agreement could be reached.
In 2011, Renault was publicly embarrassed by a botched fraud. In summer 2010, the company received an anonymous letter accusing three senior managers of accepting bribes to leak confidential trade secrets. Renault then authorised several payments to the apparent source of that letter in return for further incriminating evidence. The three men were sacked in January 2011. However a subsequent investigation found the evidence supplied by the tipster to be entirely false. At the same time, it began to appear that the entire case had been fabricated, possibly with the involvement of a member of Renault's own internal security department. The three sacked executives received a public apology and compensation. Renault's gullibility in the affair came as something of a shock to the French public. Indeed, COO Patrick Pelata offered to resign over his clumsy handling of the internal investigation. That offer was declined but he was instead transferred to another role within the Renault-Nissan alliance, and he and other managers had part or all of their bonuses for the year cut. See full profile for current activities
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