Renault Group India 2014-2016 plans: Entry level car and 5% market share
Renault has exceeded its 2011-2013 objective and delivered €2.5 billion in cumulative free cash flow. Efforts are now being concerted to “Drive the Change” to be measured in 2017 and entails generating 50 billion euros in consolidated turnover, and to reach an operating margin greater than 5% of turnover with positive free cash flow each year.
“Our strategy laid out in the first part of our plan Drive the Change has delivered results. Thanks to these achievements, the Renault group is well prepared to deploy a second ambitious, yet realistic phase of the plan”, said Carlos Ghosn, Chairman and CEO of Renault.
2014 – 2016 action plans entail sustained renewal and expansion of the product line-up beginning in 2014 fall with launch of All-new Twingo and Trafic van. Espace, Megane, Scenic and a new D sedan of the new alliance 3 million CMF C-D platform will be in focus. Cross-over vehicles will be key, and an A-entry vehicle designed for India and South America apart from new pick-up trucks for emerging markets.
International expansion and renewed growth in Europe will be vital. Renault Group looks at 8% market share in Brazil and Russia and 5% in India. New plant in Wuhan, China has initial capacity of 150,000 units, designed to produce C and D segment cross-overs.
The Renault group will enjoy the benefits of scale and improved competitiveness as a result of sharing alliance platforms and modules (CMF) on which more than 80% of future vehicles will be based. Standardized modules will account for two thirds of the value of future vehicles, up from one third today.
The localization of parts and components will increase in order to make better use of the company’s global manufacturing footprint and contain costs.
During the period, the company will also benefit from the effects of the competitiveness plans signed in France and Spain as well as manufacturing vehicles for partners.
By completion of the plan, the group will reach a capacity utilization rate of 100% in Europe (based on 2 shifts/day standard definition).
Increase synergies from the Alliance will contribute to improving Renault’s profitability. The convergence projects recently announced in purchasing, engineering, manufacturing and supply chain, and human resources will generate a minimum of € 4.3 billion by the end of 2016.
The strategy of sharing costs across the Alliance and with partners will allow Renault to sustain a high level of upstream development, while maintaining a ratio of R&D and CAPEX below 9% of group turnover.
Action plans to deliver two critical objectives
By the end of the plan, the Renault group aims to deliver two critical objectives :
Deliver € 50 billion in consolidated group turnover at the current scope of consolidation. Group turnover includes sales of vehicles and parts, associated services and business with partners.
Deliver a sustained level of profitability by achieving an operating profit margin of at least 5% of group turnover, while achieving a positive free cash flow each year.