Renault Senior Vice President and COO Eurasia Jean-Christophe Kugler Senior Vice President and COO of Eurasia Renault, Jean-Christophe Kugler Senior Vice President and COO of Renault Eurasia
- Let's start right away with questions about Russia. Many of our readers are interested in the Russian plans of the company - entering the market and launching the production of new models. Are there any plans for this year or next?
- The first point that I would like to draw attention to. In 2014, 98% of products sold in Russia were produced on local conveyors. In principle, we think that it is quite possible that in 2015 there will be 100%. In recent years, the Renault-Nissan alliance has actively invested in Russia - this is the Moscow Renault plant, the Nissan plant in St. Petersburg, and the AvtoVAZ capacities in Tolyatti. Now our goal is to reach profitability and recoup our investments. Our strategy will be to make the most of the platforms on which cars are currently being produced in Russia - new cars will be on platforms existing on the local market. Thus, we plan to launch a new car on the B0 platform at the end of 2016.
- We can assume, given that at present the Renault plant in Moscow produces Renault Duster and Nissan Terrano on the B0, what will be the third crossover on this platform under the Russian brand? Will it be a Lada crossover?
- This will be a Renault product.
- Crossover?
- We are not saying that it will be a crossover. It is too early to develop this topic.
- In Moscow, how many models are you going to produce?
- Today we have four models manufactured in Moscow: Nissan Terrano, Renault Duster, Fluence and Logan of the previous generation. The plant’s capacities make it possible to assemble five models.
- Maybe, on the B0 platform, the Lodgy minivan model will appear?
- We are not talking about Lodgy. The new model is not Lodgy. Maybe not 100% of sales, but 99% will be cars manufactured in Russia. Accordingly, some of them are imported commercial vehicles.
- You can immediately clarify: if 100% of cars sold in Russia will be produced in Russia, does this mean that a number of models will leave the market, including Kangoo, Clio RS, Koleos?
- We understand that at the moment, due to higher prices, these products are not actually sold. As for light commercial vehicles, the situation here is slightly different. Probably, Russian customers will need some specific products, and perhaps we will continue to import light commercial vehicles into Russia, but not just sell them, but make some transformations based on them in order to better respond to customer requests.
- Sales of which Renault models will be discontinued in Russia this year?
- In fact, it is wrong to say that models will leave the market. In any case, we offer our customers in the catalog all the models that we have today in Russia. The only question is that we do not keep them in stock - they are delivered to order. People will have to wait, for example, Clio RS, until he arrives from France. Unless, of course, the buyer is ready to wait.
- How did the devaluation of the ruble affect the company's work in Russia? Did the company receive losses from the Russian market in the fourth quarter of last year? And how does increasing car prices affect demand? One of the companies said that they raised prices for one of the models by 10–20% - demand fell immediately by 2 times. What about Renault?
- The first moment. We invested in Russia, invested a lot, and our investments are long-term. Thus, we will not make any tactical changes of a short-term nature, since we plan to stay in Russia for a long time. When we say that it’s important for us to stay in the long run, we mean that profitability is the most important thing for us. We cannot afford to lose money in Russia, we remain profitable. We test how much we can raise prices. On the other hand, we are not limited to this, we are reducing our costs. And here we have very serious plans for saving within the company - we are looking for any opportunities to save. Yes, we have raised prices, but we understand that this is difficult for Russian buyers. And as soon as the ruble went down, we also lowered prices - by 3%. It may be a little, but it is a significant step. And in addition, they added a lending program at 9% per annum - a rather interesting proposal.
- How is your cooperation with AvtoVAZ being built? Are you satisfied with working with a Russian company? Do you intend to expand the number of models that will be produced there under the contract scheme?
- Yes. We are satisfied. Why and why? Today, 50% of our cars sold in Russia are produced at AvtoVAZ. Do the cost and quality suit me? Yes. We are now examining our customers ’satisfaction with past-generation Logan and Sandero vehicles - at the same level as the next-generation Logan and Sandero owners. The quality of cars manufactured at AvtoVAZ is adequate to the quality of the Moscow Renault plant. Now we decide together whether we can advance further in the production of mechanical gearboxes and engines. Bu Andersson (head of AvtoVAZ. - Editor's note) said that the Renault-Nissan alliance gearbox will be on the Lada Vesta (the choice was between the Lada gearbox and the alliance). It was originally planned that the new AvtoVAZ model will have a KP of its own production.
- Do I understand correctly that the cost of the contract manufacturing scheme at AvtoVAZ for Renault is lower than at its own factory in Moscow? And is it logical to expand the production of Renault in Togliatti at AvtoVAZ?
- Not. We did not say that. Moscow factory is very competitive. And when I became the head of the region where Russia entered, it turned out to be a surprise for me to see the Renault plant in Moscow so interesting, producing high-quality cars at an attractive price. You need to understand that in the automotive business - and not only in the automobile - the cost of production consists not only of the cost of labor, but also of the total costs that the company has and depreciation. Thus, we will continue to develop the Moscow plant. At this enterprise it is interesting and profitable for us to produce. We will also increase Renault production at AvtoVAZ. At the moment, the Russian enterprise has three of our sites at which Togliatti can learn from their experience and increase their productivity - this is the Renault plant in Moscow, the plant in Pitesti (Romania) and the company in Tangier (Morocco). And what I like about Russians is that they like to compete and be the first, for this they are ready to learn the best practices and implement them at home. Now the team in Togliatti should see those best practices and implement them at home.
- Cooperation with AvtoVAZ is built not only on the contract assembly, but also on contacts in the development of new models. Does Renault intend to share components for the Lada Vesta, other than gearboxes? Will AvtoVAZ use alliance components for the new model?
- It’s not that I don’t want to answer, I just don’t know, I did not closely follow the development of the Lada Vesta project. When Bu Andersson needs experts on this project or on others, he asks us - we provide experts.
- How will the Russian market for new passenger cars develop this year? Does Renault plan to maintain its market share? Will companies leave the market? And will competition between car manufacturers be tightened due to rising prices?