Renault looks forward to renewal in China

PUBLISHED : Thursday, 12 April, 2012, 12:00am
UPDATED : Thursday, 12 April, 2012, 12:00am


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Renault is finally on the verge of making cars in China after a decade-long effort to link up with a local partner.

The French carmaker's China chief said the breakthrough wouldn't have been possible without a corporate shake-up which boosted the company's sales on the mainland by nearly 30 times in the three years to 2011.

Renault, which exported just 894 cars to the mainland in 2008, saw sales jump to 24,275 last year, following a revamping of its management team, sales network, model range and after-sales service.

In an interview, Renault China's managing director, Robert Chan, said it expected to sell 38,000 cars this year, 55 per cent more than last year.

'You need to perform well before anyone will consider co-operating with you,' he said.

While Chan declined to elaborate, it is understood the company's chief executive, Carlos Ghosn, will unveil a partnership arrangement with the Dongfeng Motor Group at the Beijing auto show on April 23. The partnership would allow Renault to make cars in China again.

In 1993 Renault established its first carmaking joint venture in China with military group China Sanjiang Space Industry Group. However, in eight years the venture only managed to sell 4,000 cars and was practically defunct by 2000.

Renault's subsequent attempt to form a new joint venture with Dongfeng dragged on for years as the French carmaker's poor performance in China continued. It was left with an inventory of 1,200 old-model cars and its sales at one point fell to an average of just 45 a month. Buyers were forced to wait months for spare parts because no dealers wanted to stock them.

Following its restructuring the company launched new models that share a lot of the technology of its Japanese sister company Nissan.

'We also restructured our dealership network so that, instead of losing money, they made an average net profit of 15 million yuan a year and managed to break even after about two years - the same time as for an Audi outlet, for example, but with just one fifth of the capital investment,' Chan said.

While only 23 per cent of Renault's customers in Asia and Africa expressed satisfaction with their purchases in 2009, the figure had risen to 88 per cent by last year.

There are concerns a partnership with Dongfeng would put Renault in direct competition with Nissan, which already makes trucks and buses with Dongfeng and is negotiating with it to form a partnership to make cars. As part of the deal, Nissan wants Dongfeng to surrender its commercial-vehicle joint venture to Volvo.

But Chan said it was unlikely a Renault-Dongfeng joint venture would compete with Nissan, since the latter's strength lay in producing energy-efficient cars with engine sizes between two litres and 3.5 litres, while Renault was better at producing smaller cars with engines of less than two litres capacity.

The Renault-Dongfeng joint venture still requires approval from the Chinese government, which has just tightened requirements for foreign investment in carmaking. Renault expects to be selling 100,000 cars a year in China by 2016 if the venture goes ahead, and 60,000 a year if it does not.


The increase in sales in China, compared with last year, that Renault expects in 2012