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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 since 1999, Renault has transformed itself into a global force with substantial operations in Asia and a foothold 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 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. It further bolstered its footprint by taking control of another Japanese manufacturer, Mitsubishi Motors, in 2015.
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A series of smart strategic moves between 2000 and 2006 transformed Renault into one of the world's most successful automobile manufacturers. Key to that development was the group's alliance with Nissan, one of the comparatively few examples of a successful partnership between Western and Eastern manufacturers, which has assisted both groups to make progress in other markets. That arrangement, added to a successful move into Eastern Europe, has helped Renault compensate for the general stagnation of traditional Western European markets.
One of Renault's most noticeable weaknesses is that it has no operations of its own in North America other than indirectly via Nissan, and only a small direct presence in China. In 2015, the Alliance also agreed to rescue struggling Japanese group Mitsubishi Motors, via a 34% stake. Combined unit sales for the Renault-Nissan-Mitsubishi alliance were 10.12m vehicles in 2017, making it the world's 3rd largest carmaker.
The main Renault Group business is divided between four brands, of which Renault itself is by far the largest. Yet although Renault has a strong presence in Western Europe, it still has a low profile elsewhere in the world, especially the US market where it has had no direct involvement since the late 1980s. The company has identified international expansion as a key priority, with Asia and Latin America as the main targets of this growth, supported by Central Europe and Russia. That strategy has gained new impetus from the stagnation in Renault's traditional stronghold of Europe, especially during 2012. Combined volume sales hit a new high in 2017 of 3,761,634 vehicles.
France is Renault's biggest market by far, accounting for almost a fifth of total sales (or 674k units in 2017). Brazil was traditionally the group's second-largest market, though less than a third the size of France by volumes. However have sales have crashed over the past couple of years. The figure was 167k units in 2017, putting it into 7th place. Russia has been another exceptionally volatile market, but a strong recovery in 2017 re-established it as Renault's second largest market in 2017 at 448k units. Other key countries were Germany (228k vehicles), Italy (216k), Spain (186k) and Turkey (179k), where it is the top-selling brand. Iran has traditionally been an important market for Renault, but operations there were temporarily suspended in 2013 as part of coordinated international sanctions. There was a tentative renewal of relations in 2015, and the Iranian market has rebounded strongly following the lifting of international sanctions. Volumes there hit 162k units for 2017. The UK and Argentina were both just over 115k units.
One of Renault's weakest markets until now has been China, where it has had no direct presence. In 2013, it agreed a joint venture with Dong Feng Motor to begin local production of Renault models, but sales are still modest. The Chinese company already has a partnership with Nissan, and is also, ironically, Peugeot Citroen's local partner.
The group's portfolio is dominated by the main Renault marque, with a portfolio led by the hugely popular Clio and Megane, and supported by the Twingo small car, Scenic minivan, Espace MPV and Laguna sedan, as well as light commercial vehicles including the Kangoo and Trafic. Other launches include a third small car, the Modus, introduced in 2004 and built on a shared platform with Nissan, and the company's first 4x4, the Koleos, launched in 2008. Newest additions to the portfolio are the Captur crossover, Wind roadster, Twizy electric two-seater, Zoe electric compact four-seater and another crossover, the midsize Kadjar, launched in 2015. The Kwid is a new low-cost entry level car, introduced in India in 2015, and gradually rolled out to other emerging markets; while the Talisman, launched in 2016 in France and a few other markets, is a top of thje range sedan. Total sales of the Renault brand rose to a record 2,670,982 vehicles in 2017, comprising 2,264,075 passenger cars and 406,914 LCVs.
The Duster SUV - actually a Dacia model - is sold under the Renault badge in several countries in Latin America, as well as Russia and India, and was actually the whole group's single best-selling model in 2014, before being overtaken once again by the new Clio. For 2016, the Clio remained the group's top-selling model at almost 419k units. The next three models by volumes are all Dacia-designed models which are also sold under the Renault banner. The Sandero hit record volumes of 402k units in 2016, followed by the Logan small car at 334k units and Duster SUV at 327k units. Renault's long-serving Megane was the #5 best-seller at 253k units.
Renault remains the #1 auto brand in France, with volumes of almost 417k units in 2017, equivalent to almost 20% market share, while Dacia ranked #5. (Peugeot and Citroen were the #2 and #3 brands respectively, giving PSA a combined share of 29.2% to 25.3% for Renault plus Dacia). The Clio remained the country's best-selling passenger car by a considerable margin, more than a fifth above its nearest rival (Peugeot's 208). The Captur is #4, while the Sandero, Megane and Twingo were all among the top ten. In 2014 the group announced a joint venture with Bolloré Group to take over production of the latter's Bluecar electric vehicles, used in the Autolib car-sharing system in Paris and other major French cities. The group is the local market leader in Europe for all-electric vehicles, led by the Zoe, Twizy and electric versions of its Kangoo LCV.
Renault is also the top-selling light commercial vehicles brand across Western Europe, with a portfolio led by the Kangoo. In something of a surprise development, Renault overtook Ford in 2010 to become the #2 manufacturer in Europe behind Volkswagen. It fell back into third place in 2012. The Renault brand also has a growing presence in the Euromed region (comprising North Africa and Russia) and Latin America, but as yet still only a minimal presence in Asia.
Renault operates two other brands in Central Europe and Asia respectively. Dacia dominates the small but busy Romanian market. Established in the 1960s under the country's Communist regime, the company agreed a cooperation agreement with Renault in 1968, which led to the introduction of a number of jointly designed vehicles during the 1970s. Following the collapse of the Communist government, Renault acquired majority control in 1999, and increased this to full ownership in 2003.
Renault and Dacia spent several years working to develop a new ultra-low cost car for sale in eastern Europe and other developing economies. This model, known as the Logan, launched in Romania towards the end of 2004 before being rolled out elsewhere in Europe during 2005. The group was forced to abandon its original pledge to price the vehicle at a rock-bottom €5,000, but the lowest-spec model sells in Romania for the equivalent of a still very low €6,000, and in developed markets for €7,500. The group also established production facilities for the Logan in Russia, North Africa and Latin America, where it is badged under the main Renault marque. It also launched a joint venture in India with local manufacturer Mahindra in 2007 with the aim of producing and selling up to 50,000 Logans a year under the Mahindra Renault brand. However, that project proved an uncharacteristic failure. The car attracted a higher tax charge than rival cars because of its length, and sales slumped from 25,000 units in 2008 to just 5,000 in 2009. The JV was terminated in 2010. Following in the wake of the Logan was another value model, the Sandero, a compact hatchback priced at a sub-compact level. It was launched in South America under the Renault name, and was introduced in Europe by Dacia in 2008, and in South Africa the year after. The Duster SUV was introduced in 2013.
Market share has declined from a near-monopoly in the 1990s, but Dacia is still Romania's biggest manufacturer by far with over 28% share (plus a further 7% share for the main Renault brand), three times the next biggest brand, Volkswagen's Skoda. Total sales have soared almost tenfold since 2000, reaching a best-ever 655,235 cars and LCVs in 2017. However, the brand's influence is even greater than that figure because of additional sales of the Duster, Logan and Sandero models under the Renault badge.
In Asia, Renault is represented by Renault Samsung Motors of Korea, in which the group has a 80% stake. (Samsung holds the remaining 20%). It now manufactures eight models: including the SM5 executive sedan, SM3 mid-range saloon, and high-end SM7, as well as SUV the QM5, which is also marketed worldwide as the Renault Kaleos. Similarly Renault's Captur is marketed in Korea as the QM3. Samsung is the country's #3 largest manufacturer, sitting well behind leaders Hyundai and Kia with around 10% market share. Despite a reputation for quality (it has topped local customer satisfaction surveys for several years), sales plunged after 2010, falling 44% in 2012 alone. Sales have remained highly mercurial, bouncing up and down from one year to another. Total sales for 2016 soared by almost 40% before slumping back by 10% the following year to 99,846 units.
In 2007, Renault fought off competition from General Motors and Fiat to secure a strategic partnership with Russia's biggest auto manufacturer AvtoVaz. AvtoVaz accounts for around 70% of all auto manufacturing in Russia. It is best-known for the Lada passenger car brand. AvtoVaz also has a separate joint venture with GM to manufacture small cars and SUVs in Russia under the Chevrolet name. However the main Lada range is still dated by comparison with Western or Japanese imports. Under the terms of the new deal, Renault acquired a shareholding in its Russian counterpart, and invested around $1bn in AvtoVaz to modernise production systems, while also taking over effective management control of the Lada brand. Renault and Nissan use AvtoVaz's vast plant outside Moscow for production of their own vehicles.
As the global automobile crisis gathered pace during 2008 and 2009, however, there were signs that the partnership between the two companies was becoming increasingly fraught as AvtoVaz struggled to avoid collapse as a result of plunging sales. In summer 2009, several senior executives from Renault seconded to AvtoVaz left the company as its Russian managers took back management control of the business. However the friction between the two sides appeared to be resolved during 2010 after the groups cemented a new long-term working relationship which also now includes the Nissan brand. In 2012, Renault and Nissan agreed terms for the acquisition of a majority holding in AvtoVaz via a newly created joint venture with state-owned Rostec. That deal completed in 2014. However sales slumped from over 620k vehicles in 2011 to under 450k in 2014 as a result of Russia's economic slowdown. There has been a strong rebound since then, with volumes for 2017 rising 18% to 335,654 vehicles, sold across the various CIS territories. In Russia alone, Lada is the top-selling brand by far with almost 20% share.
Separately from its four wholly or majority owned marques, Renault also has a controlling stake in Japanese manufacturer Nissan, which in turn has a strong presence in North America as well as Japan and other markets. The alliance has steadily become more intricate since Renault bailed Nissan out of serious financial difficulty in 1999. The French company now has a 44% voting stake in Nissan; the Japanese company in return owns 15% of Renault (but with no voting rights). In addition the two companies jointly own various shared information services and procurement entities.
In 2010, the alliance was expanded to include German manufacturer Daimler. Under this arrangement, Renault, Nissan and Daimler agreed to work together to develop new platforms for small cars and light commercial vehicles, and also cooperate on powertrain technologies. The alliance is secured through modest equity positions. Renault and Nissan each acquired a 1.55% shareholding in Daimler, which in exchange took a stake in each of its two new partners. It has just over 3% of Renault. Mitsubishi Motors was added to the Alliance in 2015 via a controlling 34% stake.
The group has a small portfolio of other automotive operations. Renault Agriculture makes farming machinery. The group has only a 20% stake in the latter, which is controlled by German company Claas. The group's heavy commercial vehicles operations, Renault VI and Mack Trucks, were sold to Volvo in 2001. As a result Renault became the biggest shareholder in the Swedish truckmaker with a voting stake of almost 18% at the end of 2010 (but equity of 6.5%). However, Renault sold some of its Volvo shares in 2010, reducing its voting control from around 22%, and then divested all its remaining stake in 2012 for around €1.6bn. It continues to license Volvo to make Renault-branded trucks.
Another unit, Compagnie Financiere Renault, comprises more than 60 companies providing a wide variety of services including vehicle leasing, loans and rentals. Businesses included in this division include Renault Eurodrive and RCI Banque (formerly known as Renault Credit). The group also acquired all of Nissan's financing subsidiaries in 1999.
Renault Sport is the group's racing division. Renault has been a leading sponsor of Formula 1 racing, off and on, since the late 1970s. In 2000 it purchased what had previously been the Benetton family's F1 team. In 2009, the team was shamed by the revelation that driver Nelson Piquet Jr had been persuaded to deliberately crash his car in a Grand Prix race order to secure the lead for a team-mate. Despite the scandal, no serious punishment was imposed, although Renault was obliged to pay substantial damages to Piquet after previously accusing him falsely of lying over the crash. As a result of the furore Renault substantially reduced its involvement in the sport. It sold a 75% stake in the Renault F1 team to a Luxemburg investment fund, and sold the remaining 25% to Group Lotus of Malaysia in 2010. It continued to supply engines and car chassis in return for branding in what became the Lotus F1 team, but instead began supplying engines to the Red Bull team. That relationship soured during 2014, and late the following year Renault reacquired a controlling stake in the now-struggling Lotus team, renamed Renault Sport F1.
After an 11% decline in 2009, group revenues for 2010 rebounded by almost 17% to just under €39.0bn. Net income performed even better recovering from a €3.1bn loss to profit of €3.5bn, the best result for more than three years. However that figure included a €2bn gain on the sale of Volvo shares as well as over €1.0bn in profit contribution from Nissan. For 2011, revenues continued to climb, rising 9% to €42.6bn. Net income was €2.1bn. At an operating level, excluding exceptional gains and the contribution from Nissan, operating income doubled to €1.2bn. There was another slump in 2012, as revenues fell back by 3% to €41.27bn, while net income plunged 43% to €1.77bn. The contribution from Nissan accounted for almost 70% of profits. Without that benefit, operating income plummeted more than 90% to just €122m.
Performance for 2013 was at least stable, with revenues rising to €40.93bn. Operating profit also bounced back sharply, almost doubling to €1.2bn. However there were large impairment charges against operations in Iran, which were closed during the year, and restructuring costs, all of which further dented net profits, which plummeted by two-thirds to €586m. Revenues edged up marginally in 2014 to €41.06bn, but without the impairment burden there was a dramatic increase in net income, which more than tripled to €1.89bn. Buoyed by rising sales and prices, and helped by lower costs, revenues rose 10% in 2015 to €45.33bn, while net income soared by over 48% to €2.96bn.
Revenues topped €50bn for the first time in 2016, jumping 13% to €51.24bn, of which just under €49bn came from automotive operations and the rest from finance and other interests. Net income soared by 20% to €3.54bn. That figure included a €1.7bn profit contribution from Nissan and a small deficit from Avtovaz. Another 15% lift in 2017 took group revenues to €58.77bn, while net income jumped by 47% to €5.21bn, boosted by a €1bn tax gain from Nissan in the US. Excluding that exceptional item, profit growth would still have been over 18%.
Revenues slipped 2% in 2018 as a result of currencies to €57.4bn. Without the previous year's one-off tax gain, net income fell to €3.45bn.
The French government has gradually reduced its shareholding in Renault since privatisation in 1996, reducing to just over 15% of equity in 2014, marginally more than Nissan's stake. In early 2009, the state agreed to loan Renault €3bn in emergency funding to prevent compulsory redundancies within France. That amount was repaid in 2010. However, in 2015, the state increased its stake to just under 20% to prevent the group from passing a resolution to prevent the implementation of a new corporate law doubling voting rights for shares held for more than two years. This increase caused some alarm at Nissan raising fears of interference in the Japanese company by the French state. Those concerns were resolved in an end-of-year agreement which reaffirmed a reduction in the state's voting shares in Renault to just under 20%. It also protected Nissan from any interference in its corporate governance by Renault.
Carlos Ghosn was until 2019 chairman and CEO of both Renault and Nissan. He took over the role of Renault chairman from Louis Schweitzer in 2009. In 2016 he also became chairman of Mitsubishi Motors, following the Renault-Nissan Alliance's purchase of a 34% stake in that business. However, in a startling development, in Nov 2018 he was accused by Nissan of securities fraud, arrested, and ousted from the company's board. It remains to be seen how this dramatic development will play out. Towards the end of January 2019, with no immediate end to his detention in Japan in sight, he resigned as chairman & CEO of Renault. Thierry Bolloré, previously chief competitive officer, was elevated to CEO. Jean-Dominique Senard, also CEO of tiremaker Michelin, was appointed as group chairman and tasked with overseeing negotiations with Nissan and Mitsubishi over the future of the Alliance. Yet Bolloré too was ousted less than a year later. Clotilde Delbos, previously CFO, was named as interim CEO.
Renault COO Patrick Pelata resigned in 2011 following a badly handled corporate scandal in which three managers were dismissed on grounds of corporate espionage, only for it to emerge that the accusations were entirely unjustified, and part of an intricate fraud. Carlos Tavares, previously head of Nissan Americas, was appointed as Renault's new COO in June 2011. However, he too left the group abruptly in August 2013, apparently after his request for a wider role within the group was turned down by Ghosn. Tavares was subsequently appointed as CEO of Renault's arch-rival PSA Peugeot Citroen.
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 €1.7bn ($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.
Last full revision 16th January 2018
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