No end to Euro car sales skid, says Renault

RENAULT will spend €5.7 billion ($A7.6b) over the next three years to adapt its factories to what it sees as a long-term decline of the European automotive market and the increasing dominance of emerging markets such as China and India.

The French company says it will invest in high value-added production in its European factories, with products such as its pioneering electric vehicle range and a new high-end car to come on stream in 2014, while stepping up plant capacity elsewhere to take advantage of growth in Asia, South America and Eastern Europe.

In a chilling summary of the economic situation on its traditional patch, Renault says in its latest long-term strategic report that it foresees a lasting decline in the European automotive market.

It says European car sales have declined 20 per cent since 2007, falling steadily each year, to 15.3 million units in 2010. Worse, it does not see any signs of recovery.

“Forecasts for 2016 do not see the European auto market returning to its pre-crisis level of 2007,” the company said.

Renault says the proportion of its sales outside Europe have risen from 17 per cent in 2000 to 37 per cent now, and will continue to rise to 43 per cent by next year.

Renault indicated that it would use its alliance with Nissan to help soak up some of its European production capacity, while also building vehicles such as the four-door Smart for Daimler AG at its Slovenian plant alongside the new rear-engined Twingo and related models.

From top: Renault Zoe, Renault Kangoo Van ZE and Renault Twizzy.

Renault president and CEO Carlos Ghosn said the performance and competitive edge of Renault’s plants would be crucial to the strategic plan’s success.

“The mobilisation of the men and women producing our vehicles and powertrains is essential,” he said.

“Our strategic plan enables us to adjust industrial production capacity to global demand, without closing sites or implementing redundancy plans or staff departure plans.”

Renault said it would begin production of “upper range vehicles” to replace the ageing Espace people-mover and Laguna sedan at its Douai plant in northern France from 2014, on a platform to be shared with Nissan.

“This new platform will generate substantial economies of scale for both companies,” it says in its plan released in Europe.

Renault says France will be the company’s centre for electric vehicle production, making 80 per cent of its electric vehicles such as the Zoe and Kangoo ZE by 2015.

As well, it will open its Flins battery plant in France by 2013, with a capacity of 100,000 batteries a year, while its Cleon plant has been ear-marked for a third-generation electric motor.

The quirky Twizy EV will go into product ion at Renault’s Valladolid factory in Spain, helping to secure the future of Renault’s large manufacturing presence in that country.

Renault says it will begin making entry-level vehicles in Morocco for Europe, Africa, Mexico and the Middle East.

It also says it will continue to invest abroad, in particular in Brazil, India and Russia, but it gave no details.

The company says vehicle sales in the so-called BRIC countries (Brazil, Russia, India and China) have increased four-fold in the past 10 years and now account for one third of all sales worldwide.

Renault, which has had a Euro-centric focus until now when compared with rivals such as Volkswagen, belatedly wants to get a slice of the action.

In another cultural change, Renault has also announced it will adopt partner Nissan’s Monozukuri approach to product development and cost saving.

Translated literally from Japanese, ‘mono’ means thing and ‘zukuri’ means the process of making – making things. However, in Japanese culture, the phrase has a deeper meaning, embracing a spirit to make ever better things with constantly improving production process and efficiencies. It is similar to the ‘kaizen’ approach made famous by Toyota.

Says Renault: “The objective is to cut the total cost of a vehicle while optimising quality.

“The method involves working on the entire value creation chain, starting with vehicle design and continuing with the detailed design of each component, cooperation with suppliers, packaging and shipment of components, lineside delivery and assembly on the vehicle, through to delivery to the end customer.”