Globaloganization of Renault Development Strategy

🌎 Said El Mansour Cherkaoui – saidcherkaoui@triconsultingkyto.com🌍

🌎Analyses et Publications sur l’Industrie Automobile🌍

Automotive Industry: World Perspectives

Renault Road to Morocco, Global Automotive Drives and Strives

AUTOMOBILE INDUSTRY , FRANCE , MOROCCO

Ministère de l’Industrie et du Commerce – https://www.mcinet.gov.ma

Le Ministère de l’Industrie et du Commerce lance, en concertation avec le Ministère de l’Economie et des Finances, MAROC PME et la CGEM, la 1ère édition de …

JOB CREATION BY THE AUTOMOTIVE INDUSTRY IN MOROCCO – Picture by the Ministère de l’Industrie et du Commerce: Accueil – MIC

JOB CREATION FIESTA DEL NORTE DE MARRUECOS

JOB HIRING FEAST BY THE AUTOMOTIVE INDUSTRY IN MOROCCO

Picture by the Ministère de l’Industrie et du Commerce: Accueil

These considerations are shaping and increasing the impact the automotive industry difficulties to adapt new forms of innovation. The weaknesses inherited by the car manufacturers from the past are blown globally by the several sudden reversals of trends and shifts of the international demands given the surge in inflation of the energy products, the drop in their consumption, the use of renewable source of energy. the continuous in layoffs and the increase of the interest rates as a preventive cure against the sliding recession.

The globalization of the automobile sector while increasing the return on investment has also created new and pressing hurdles and impacts.  Globalization, digitalization, robotization, logistics, artificial intelligence, disruption of supply chain management, climate change, energy crises, burst of electrical vehicles, regional conflicts in Europe and Africa and increasing competition in the world market are driving and imposing new changes the face of the automotive industry.

Renault-Nissan | Alliance’s Morocco Plant Produces 1 Millionth Car | Wards Auto

The plant produces Renault’s budget sub-brand Dacia and its millionth vehicle is a blue 5-seat diesel-powered Dacia Lodgy

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At the core of Morocco’s effort to encourage foreign business is the 1995 Investment Charter Law, which simplified the tax code and offered tax incentives for foreign investment. Incentives include a 2.5 percent discounted tax rate for land acquisitions intended for housing developments; a 0.5 percent tax on any company contributing to capital formation or capital increase; and an exemption from registration fees when purchasing land intended for capital investment.

The Charter also shields foreign investors from paying value added tax (VAT) on imported equipment, materials, and goods, and exempts start-up firms from license fees, corporate taxes, and general income taxes for five years.

As additional incentives, Morocco has simplified its customs schedule and is improving its labor pool by investing in appropriate vocational training.

Foreign car companies setting up shop in Morocco today benefit from a variety of incentives, including a five-year corporate tax holiday, VAT exemptions, and land purchase subsidies. Additionally, the Hassan II Fund for Economic and Social Development generously covers up to  30%  of investment costs and up to 15% of new equipment costs in the automotive sector.

Moroccan workers at a Renault factory  earn  about one-third of what their counterparts make in Romania or Turkey. Additionally, the government is keen to assist in employee  training  and has created institutes for self-related jobs. These include management training for plant and vocational school administrators who are responsible for producing qualified operators, technicians, and assembly workers.

The first production line opened in February 2012 and a second line followed in 2013. The annual production capacity is now 340,000 vehicles, mainly Dacia brand. Half of the production of the brand in the world is carried out Morocco in Tangier or the SOMACA establishment in Casablanca.

Factories in the sun economist.com/ – European firms bring carmaking and an aerospace industry to north Africa | Business

In the first half of 2017, Renault-Nissan is the world’s leading automaker. With 5,268,079 cars sold in the first six months of the year, the group dethrones Volkswagen (5,155,600 sales) which was No. 1 in 2016 despite the diesel gate. Toyota completes this podium with 5,129,000 vehicles sold. Over the past year, the number of cars sold by Renault jumped 10.4%, adds the business daily. *

Globaloganization-of-Renault-Development-Strategy-_-Said-El-Mansour-Cherkaoui Download

Despite its Romanian heritage and French ownership, Dacia is seen as a Moroccan brand by locals, and in 2017 is the market leader with a 29% share (42% when including Renault). While the Tangier site is read with Renault-Nissan signs, 98% of the vehicles that leave the factory carry the Dacia badge, with the remaining 2% dedicated to Renault models. 

All Dacia models are top ten best sellers in Morocco, and are sold via the largest sales network in the country, with 80 points of sale overall and 17 dealerships between Dacia and Renault.

On July 2017 Renault announced that a millionth vehicle was produced at the Renault-Nissan factory in Tangier that opened in early 2012. The car – an unassuming Dacia Lodgy – rolled off the assembly line of a Renault-Nissan plant in Tangier for sale  in  Turkey. 

This global integrative efficient production facilitated access to labor, knowledge and skills at the lowest rates. This kind of system is the prelude to the manufacturing of new electric cars: a $3,000 car for the Indian market and a joint venture with Russian car-maker Avtovaz to build a car for the Russian market. In fact, the Logan produced in Morocco is already exported to Europe.

The millionth vehicle of the Renault-Nissan plant in Tangiers. is a 5-seater Dacia Lodgy, blue azurite, equipped with a diesel engine, for a customer in Turkey specifies Renault-Nissan. In total, 474,840 Sandero, 320,078 Dokker and 193,181 Lodgy have been manufactured since the launch of the Tanger plant in 2012.

Resources

Source include Gail Edmondson in Pitesti, Romania, with Constance Faivre d’Arcier in Paris, “Got 5,000 Euros? Need A New Car? Drivers across Europe are clamoring for Renault’s ultracheap, no-frills Logan” July 4, 2008, Business Week, European Edition

• Morocco On The Move

By Said Cherkaoui – published on ♦ 04-03, 2010

Executive Briefing: This article presents the drive of Renault from the edge of bankruptcy to the rise of its model Logan to international preeminence, fame and success. At the same time, Renault concentrated its production in countries that have been considered by the major car manufacturers as solely a marketplace and not the location of their production.

For Renault, the first half of the 1980s were “the crossing of the desert” when the French automaker reached the edges of bankruptcy, while Volkswagen continued to expand in terms of production and market reach. Volkswagen developed its international base through the acquisitions in 1991 of Skoda, the automobile manufacturer in the Czech Republic and SEAT, the Sociedad Española de Automóviles de Turismo. After the withdrawal of Fiat in1981, the Volkswagen Group subsidiary Audi AG signed a cooperation agreement with SEAT, becoming the major shareholder in 1986, and 100% owner of the company. In 1990, SEAT expanded its operations in China and Latin America.

In comparison, Renault put the brakes on its international drive and concentrated its efforts on solving internal dissensions in the aftermath of the terrorist slaying of its CEO. Renault also focused on renewing its relationship with the new French Government, smoothing the resistance of left-wing Unions, finding acceptable solutions to its large and aging North-African immigrant workers in France, developing creative models, and raising quality. While seeking these goals, Renault also sought to increase its market share in the Northern European countries where it faced hard competition and realized only low profit margins. Renault had to change direction and in 1998, Renault acquired the plant of Curitiba in Brazil and the following year, it became the major shareholder in Nissan of Japan, Dacia of Romania and Samsung of Korea.

The Logan Global Phenomena

Renault acquired the Romanian factory Dacia with the aim to become specialized in the production of the super budget Renault / Dacia Logan Car to be sold for 5000 Euro (USD 6105), which competed with the best of the world’s cheapest cars. Targets for the Renault Logan car included Rover’s CityRover, Kia Picanto, Seat Arosa, Daihatsu Cuore, Daewoo Matiz and the Volkswagen Fox.

In June 2005, Renault made the Logan available in France, Germany, and Spain at a base price of $9300, half of the average price of competitive offerings. Renault’s initial target markets were countries like Romania, Poland and Russia, where most people cannot afford a car with Western European pricing. This is the first step in a global rollout of the Logan. In mid-July 2005, Renault announced that it had manufactured 100,000 Logan vehicles at its Romanian factory, exceeding its own most optimistic estimates. Shortly after the launch in Eastern Europe, Renault was shocked to learn that Western Europeans liked the Logan as well. Over the next several years, Renault factories in Russia, Morocco, and Colombia will begin producing the Logan. The Logan sells for about $6000 in these countries, while cars like the Ford Focus or the Volkswagen Golf cost around $18,000. Deutsche Bank estimated that Renault can produce the Logan for $1089 per car; equivalent autos produced in Western Europe run about $2500. In fact, this fast produced car is not recognized only for its low cost of operation but also production and usage.

In February 2008, Renault celebrated 80 years in Morocco. Renault has had a long lasting, unbroken relationship and active presence in Morocco. But it hasonly been since 1966 that Renault has been assemblingvehicles at SOMACA (Moroccan Society of Automobile Construction), located in Casablanca, and owned 80% by the Renault Group and 20% by the PSA Group.

SOMACA started the assembly of Dacia Logan in 2005. In total, Renault currently employs 1,800 people in Morocco, and represents 1.4 percent of the Group total and the production in 2007: 28,764 vehicles, or 1 percent of the Group total.

In this way, Renault strengthened its presence in a significant market, where it was a sales leader at the end of August 2000. Before 2000, Nissan was a brand unheard of in Morocco. Then Renault took a majority stake in the carmaker. The next step was made by Renault Morocco in taking over SIAB, the Nissan’s exclusive importer in Morocco, which was until then wholly-owned by the ONA Group. Renault Morocco stepped up distribution of Nissan automobiles through the same Group, and in 2006 1,100 Nissans were sold.

Launched in July 2005, the Logan became the best selling vehicle in Morocco within its first six-months. In 2006, 12,700 Logans were sold in Morocco, making it the success of the year there. The true moment of the explosion in sales was the release of the 1.5 diesel engine. Around 75% of the cars sold in Morocco by Dacia Logan were diesel versions.

Early in 2008, the Renault Nissan Alliance started work on the “Renault Tanger Méditerranée” industrial complex. It will comprise an assembly plant for low-cost vehicles based on the Logan platform.

The Moroccan Hub is one link in the chain of regional and global integrative cost-efficient manufacturing units implemented in other emerging marketplaces to produce low cost vehicles. This global integrative efficient production while facilitating access to labor, knowledge and skills at the lowest rates. This kind of system is the prelude to the manufacturing of new electric cars; a $3,000 car for the Indian market and a joint venture with Russian carmaker Avtovaz to build a car for the Russian market. In fact, the Logan produced in Morocco is already exported to Europe.

Conclusion

Renault is now ready to implement more global centric regionalized business units that are connected by synergistic output and productivity performances with terms of quality, technology and profitability that equal if not surpass the major global car manufacturers. Renault applied an integrated productive strategy based on the Just-in-Time approach that imposed the implementation of total quality management and the enhancement of competitiveness to the level of international standards, particularly in the cases of Samsung and Dacia. With Nissan, Renault considered its partnership a synergistic one in the longer term, despite the difficulties faced in the early stage of their alliances and the recent challenging times that resulted in Carlos Ghosn stepping down in favor of a veteran deputy, Patrick Pélata. With this move, Renault escaped from its European Fortress and established itself as the fifth largest car manufacture in the world. This world ranking enabled Renault’s innovative and creative departments to develop, in concert with Nissan cutting-edge technologists, engineers and designers, more efficient and alternative fuel driven vehicles that will differentiate and localize productions and models in accordance to local demands and regional market needs.

Sources
Gail Edmondson in Pitesti, Romania, with Constance Faivre d’Arcier in Paris, “Got 5,000 Euros? Need A New Car? Drivers across Europe are clamoring for Renault’s ultracheap, no-frills Logan” July 4, 2008, Business Week, European Edition.

About the Author – saidcherkaoui@triconsultingkyoto.com

Dr. Said Cherkaoui’s career combines business and technology management, applied research, and academic responsibilities. From 1982 to present, Dr. Cherkaoui has held executive positions as Vice President with both SVT Africa – and Logistics Systems, Director of Business Development at Mercanteo/Amient, Senior Manager at Sprint Corporation and Corporate Accounts Manager at Everex. He has also served as the Cochairman of the International Business Development Committees on Africa and the Middle East at the San Francisco Chamber of Commerce. Dr. Cherkaoui holds a doctorate in Economics from the Université de Sorbonne, Paris.

♦ gBR Article 04-03, Copyright © 2010.