Gaining ground on rivals
IHS Automotive analyst Ian Fletcher said Renault-Nissan will continue to gain ground on rivals over the next five years because its vehicle sales are expected to rise at a faster rate than GM’s and Toyota’s. IHS forecasts that alliance sales will rise to 9.47 million vehicles by 2020.
Ghosn told shareholders that volume growth will not come at the expense of profitability. He aims to increase Renault’s operating profit margin to 5 percent in 2017 from 3 percent last year. Last month, he said Nissan targets an 8 percent margin by 2017, up from 5.3 percent last year. Boosting synergies between Renault and Nissan is key to Ghosn’s vision of increasing volume without causing costs to skyrocket.
In March, Ghosn announced the deepest moves to date to integrate the two companies. The alliance is combining four key areas – engineering, manufacturing, purchasing and human resources – under a new team of managers with Japanese executives from Nissan taking engineering and manufacturing leadership roles while Renault executives will head purchasing and human resources. Ghosn said the move will help the alliance achieve annualized synergies that will save the equivalent of 4.3 billion euros by 2016.
Ghosn has been criticized for not pushing the two automakers to integrate more during their 15-year alliance, but industry watchers say that takes time. “It took 25 years for Peugeot and Citroen to complete their merger after Peugeot purchased Citroen. It is going to take 20 years for Fiat to fully integrate Chrysler,” said Deutsche Bank analyst Gaetan Toulemonde. Ghosn outlined other key strategies at the April 30 annual meeting in the Palais des congres convention center in Paris:
- Positioning Renault as Europe’s No. 2 brand by sales
- Reinforcing Renault’s position as the world’s biggest and best-known French automaker
Renault is currently Europe’s No. 4 brand by unit sales with a volume of 291,220 vehicles in the first four months. Ahead of Renault were VW brand (541,148), Ford (366,332) and Opel/Vauxhall (299,862) Last year’s debuts of the new-generation Clio subcompact and the all-new Captur small SUV gave the Renault brand a tailwind, as will the recent introduction of the Twingo minicar.
Ghosn, however, is counting on the renewal of key models in the compact and large-car segments to help the brand pass Ford and Opel. Renault will debut its new Espace minivan at the Paris auto show in October. This will be followed by the replacements for the Megane compact car, Scenic compact minivan and Laguna mid-sized sedan. These new vehicles will be underpinned by the alliance’s common module family (CMF) platform for C-segment (compact) and D-segment (large and mid-sized) vehicles. CMF-CD is the first of a group of modular architectures the alliance is developing to underpin future models.
The next Espace, Laguna and Megane families will share the CMF-CD platform, which will underpin 3 million alliance vehicles compared with 700,000 for the current platform, Ghosn said. Nissan’s new Rogue, Qashqai and X-Trail SUVs are the first CMF-CD models to come to market. Ghosn told shareholders that about 80 percent of future Renaults will be underpinned by CMF platforms, creating 30 percent savings in development costs and between 20 percent and 30 percent savings in purchasing costs depending on the model.
Next year, Renault-Nissan will launch an entry-level car for emerging markets underpinned by the CMF-A platform. In 2016, a CMF-B platform for subcompacts such as the Renault Clio and Nissan Micra will debut.