The snow fell in the night, seems to have plunged the site into a deep sleep. On this Sunday morning, only a few carcasses slide along the assembly line between brand new equipment. The first Renault plant in China, located in the city of Wuhan, in east-central Somalia, living its last hours of calm: it must be inaugurated on Monday in the presence of Carlos Ghosn and its Chinese partner Dongfeng. Renault and the Chinese manufacturer, partners in a 50% joint venture, invested 870 million euros in the project.
With an area of 200 hectares, the site has a capacity 150,000 cars a year, which may be increased to 300,000 units forward or even 450,000 – and 600,000 engines – which by then would the biggest Renault factory worldwide. “ We aim to run between 3 and 3.5% of the Chinese market ,” says Jacques Daniel, the head of the joint venture.
Renault Does it not happen after the battle
The question nevertheless arises: Renault Does it not happen after the battle? The group is the last major manufacturer to enter the world’s biggest auto market. And it happens in a deteriorating environment. Sales of new cars increased by 7.8% in 2015, far from the double-digit growth in recent years. The sector faces emerging overcapacity and pressure on prices. In this context, the development of an unknown brand to the general public is a challenge. “ We arrive at more moderate rates of growth, around 5% in 2016, and profitability will be under pressure. But 5% growth is immediately one million cars and more! And our cost base is highly optimized with Nissan “Judge Jacques Daniel.
A” copy-paste “of Nissan’s plants in China
While the Japanese ally, a strong presence in China, has often been pointed in France for being partly responsible for the absence of Renault, Nissan is now of valuable. The Wuhan plant is a “copy-paste” of Nissan’s factories in China, both at the level of plans, equipment or staff – many of the employees come from the joint venture between Nissan and Dongfeng, or were trained. Thanks to this contribution, it only took two years since Beijing’s green light for the plant is operational, with only one year of construction.
Synergies in Shops industrial
The synergies are found in production: the two vehicles produced locally – crossover Kadjar and, at year end, another crossover segment D, Koleos successor – the twins are the Qashqai and X-Trail Nissan, and are the only in the Renault range to borrow a Nissan platform, called P32. What help maximize the sharing of components (engines, gearboxes, are not visible). “ Only 7% of our suppliers are specific, the rest is shared with Nissa n,” says Jacques Daniel.
A network 125 dealers
Rest vehicles for sale … To make known, Renault put on a contract with actress Fan Bingbing, very well known in China. More importantly, it limits its offering to a single body type: SUVs. Is the segment that has the highest growth in 2015 (+ 40%, according to IHS). Same strategy on distribution networks. The Diamond focuses on cities with more than 3 million inhabitants, through a network of 125 dealers, which will increase to 175 end 2016. The overall goal: quickly exceed one billion yuan of net income (or 130 million euros). “ From this profit level, we will have the authority to extend our range of vehicles ” continues Jacques Daniel.
If the agreement involves the production of an electric car on behalf of Dongfeng – based on Fluence ZE, from 2017 – Renault will wait to locate a Talisman, a space or Captur. Similarly, it has not the right to locate vehicles of less than 4.5 meters, which excludes the moment its low cost cars (Duster).
By then, the group has everything to prove. Between market downturn and difficulties of new entrants – DS, Lincoln and Volvo have had difficult starts – China is no longer the paradise it was
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