Renault

Renault : advertising & marketing profile

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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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Recent stories from Adbrands Update:

Adbrands Daily Update 2nd Dec 2019: In another sudden change to Renault's senior management team, the group announced the abrupt departure of EVP global marketing Francois Renard after only a year in his role. He is replaced by Xavier Martinet, previously head of Renault's Italian subsidiary. Martinent becomes SVP global marketing.

Adbrands Daily Update 11th Oct 2019: The worsening state of relations between Renault and alliance partner Nissan was highlighted by the abrupt dismissal of the French company's CEO Thierry Bolloré after less than a year in that role. No specific reason was given. He was clearly shocked by the board's decision, telling Les Echos newspaper that "the brutality and the totally unexpected character of what is happening are stupefying. Operationally, I do not see where the fault is." Yet before his elevation to the top job, Bolloré was deputy to ousted Renault and Nissan chairman Carlos Ghosn; his sudden removal by the Renault board is perceived to be an attempt to appease Nissan by cutting another link to the previous administration. Yet, the latest move has also been seen by some observers as a possible step towards reaching an amicable dissolution of the Renault-Nissan relationship in favour of a resurrected realignment with Fiat Chrysler. CFO Clotilde Delbos takes over as interim CEO until a fulltime replacement can be appointed.

Adbrands Social Media 4th Jul 2019: "Policeman / Windscreen / Bear". Don't be tempted to fit cheap car parts; they'll end up costing you in other ways. That's the message of this entertaining ad series from Publicis Conseil for Renault Genuine Parts. Each of the gags is delivered deliciously dry; it's a style of American humour we don't often see in French ads, but it works brilliantly.

Adbrands Daily Update 9th Jun 2019: That didn't take long: Fiat Chrysler's bold plan for a merger with Renault collapsed after only a few days, apparently as a result of interference by the French government, which is Renault's most influential shareholder, as well as resistance from the carmaker's Japanese partner Nissan. The state and Nissan each hold a 15% equity position in Renault. French finance minister Bruno Le Maire instructed Renault to slow negotiations with FCA in order to avoid disrupting the existing alliance with Nissan and Mitsubishi, which is deemed the greater priority, despite evidence of continuing tensions. With Renault's hands apparently tied, Fiat Chrysler's chairman John Elkann abruptly withdrew his merger offer. A person close to Fiat Chrysler told the Wall Street Journal, "The French state has been intrusive in the extreme. They have sought the final word on every issue and this has created a situation of uncertainty that finally became intolerable."

Adbrands Daily Update 27th May 2019: Negotiations between Fiat Chrysler and Renault over some form of strategic alliance escalated quickly over the weekend. Fiat Chrysler has now proposed a full merger of the two businesses as equal partners in what would become the world's third largest car producer behind Volkswagen and Toyota. FCA proposes that Renault's Jean-Dominique Senard would be CEO of the combined entity with its own controlling shareholder John Elkann as chairman, and ownership of the business would be split 50/50 between the two group's existing shareholders. FCA is also offering to pay a special dividend to its own existing shareholders to offset the disparity between the two companies' respective valuations: FCA is significantly more valuable at present because of its US operations. Renault's board has agreed to study the proposal and come back with an answer in due course. The main complication is what to do about Nissan, in which the French company currently holds a large stake. However that relationship is under considerable strain as a result of the arrest by Japanese authorities of Carlos Ghosn, the architect of their alliance, as well as by the sharp downturn in the Japanese group's performance. Could Renault decide to pull the plug on its Nissan alliance in favour of Fiat Chrysler? Or will a deal be struck to accommodate all three?

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Background

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 €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. See full profile for current activities


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