Renault adjusts its strategy in China, Dongfeng Renault is a thing of the past

According to the announcement issued by Dongfeng Motor Group, Dongfeng Motor plans to acquire all the shares of Dongfeng Renault held by Renault. After friendly negotiation between the company and Renault, a non-binding memorandum was signed and a preliminary intention was reached. Dongfeng Renault will cease business activities related to the Renault brand.

It is reported that Renault has previously stated that it plans to terminate products and businesses that have little hope of profitability. In February, Renault's interim CEO Clotilde Delbos said it would cut at least 2 billion euros (about $2.2 billion) in structural costs over three years as it reviewed the business. It's "taboo". Renault promised that it "will evaluate the assets of its joint venture in China and conduct cost control." "Change strategy"? "Cost reduction"? "Asset evaluation", these words also somewhat imply Renault's decision to transfer its equity.

As one of the oldest automobile companies in the world, Renault has gone through 122 years of development since its founding in 1898. Dongfeng Renault Automobile Co., Ltd. was established in 2013 with joint investment from Dongfeng Motor and French Renault AG. At the end of 2013, Dongfeng and Renault formally signed a joint venture contract for Dongfeng Renault Automobile Co., Ltd., each holding 50% of the shares, in an attempt to further develop the "Golden Triangle" strategic cooperation of "Dongfeng-Renault-Nissan". Before domestically produced products were launched, Renault achieved profitability in 2014 solely through imported sales.

In 2016, the first batch of domestically produced Koregas were launched. Speaking of which, Renault achieved domestic production in China in less than three years. Dongfeng Renault's plan is perfect. It wants to ride on the booming domestic SUV market and carve out a niche in the Chinese market through its two brothers, Koleos and Kolega. With these two models, Dongfeng Renault's sales exceeded 30,000 units in 2016, and it was even more brilliant in 2017, with sales reaching 72,188 units. This is also the highest sales peak of Dongfeng Renault so far, unprecedented and possibly unprecedented.

Although Renault realized its dream of landing in China, the Chinese market at that time was no longer a blue ocean. Facing the gradually intensifying market competition, as a new brand with low domestic reputation, it was in a difficult situation. Dongfeng Renault faces considerable challenges in the Chinese market.

In 2018, although there has been a downward trend, fortunately, we have a good foundation in 2017. The annual sales this year were around 50,000 vehicles. In the cold winter of the auto market, such results are still gratifying. of.

In the first half of 2019, Dongfeng Renault’s sales were only 8,901 units, a decrease of 75.97% compared with the same period last year. For a joint venture like Dongfeng Renault, there is only one word for such market performance: "miserable". Throughout last year, Renault sold 179,571 vehicles in the Chinese market, a decrease of 17% compared with 2018. These sales come from four joint ventures including Dongfeng Renault (passenger car business), Brilliance Renault (commercial vehicle business), Yijiet (new energy vehicle business) and Jiangling New Energy (Renault is the majority shareholder).

For the whole of 2019, Dongfeng Renault’s cumulative sales were only 18,500 units. The monthly sales of many single models of cars and SUVs in China exceeded this amount. After entering 2020, Dongfeng Renault has been in a "suspension" state, with output in January being "0" and sales of only 586 vehicles, down 81% year-on-year, and has lost its sense of presence.

Although sales are lackluster, it can be seen from this that Renault is the multinational car company with the largest number of joint ventures in China, and it does need to adjust. When the cold winter of the car market arrives, Dongfeng Renault's shortcomings are undoubtedly exposed. The product structure is single, the product strength is not strong, and the models are too single.

Dongfeng Renault, founded in 2013, has only four models, and only two models, Koleos and Kolega, are domestically produced. Dongfeng Renault, which wants to dominate the world with two models, seems to be unable to do so. In addition, Dongfeng Renault is also unique in that it frequently changes senior executives.

A simple explanation:

In May 2016, Dongfeng Renault’s marketing chief Xiong Yi resigned and Chen Xi took over;

In November 2016, Dongfeng Renault’s executive vice president Hu Xindong resigned;

In 2017, Dongfeng Renault Marketing Department Director Qu Gang resigned;

In October 2018, Hong Hao, the former full-time deputy head of Dongfeng Nissan’s marketing and sales headquarters and director of the business development department, replaced Chen Xi Serves as Vice President and Head of Marketing and Sales Department of Dongfeng Renault;

On April 1, 2019, Ge Shuwen took over as President of Dongfeng Renault Automobile Co., Ltd.;

On July 7, 2019 , Wei Wenqing served as director and executive vice president of Dongfeng Renault Automobile Co., Ltd.;

In March 2020, Hong Hao resigned as vice president of Dongfeng Renault;

According to analysis, in the French joint venture In enterprises, although Chinese managers have rich market experience, they are not easily adopted. It is difficult for French car companies to adjust product prices and marketing strategies according to changes in the Chinese market. Chinese and French management have very different understandings of the market, so the share of French cars in China has declined rapidly.

Renault Group said that its future long-term development strategy in China may be from the perspective of light commercial vehicles and new energy vehicles, which will form the two pillars of its future business in China. Originally, these two The fields are also among its strengths.

Dongfeng Motor Group Co., Ltd. plans to transform and upgrade Dongfeng Renault. In accordance with the overall strategic layout, Dongfeng Motor Group Co., Ltd. continues to be committed to achieving high-quality development and innovation in technology and business models. "In accordance with the overall strategic layout, Dongfeng Motor Group Co., Ltd. will continue to strive to achieve high-quality development and innovation in technology and business models," the company wrote in a statement.

Renault stated that it will continue to provide services to 300,000 Renault car owners in China through the manufacturer's local dealers and the alliance's synergy mechanism to ensure that the rights and interests of car owners are not lost.

In addition, in order to avoid "secondary harm" to employees after the epidemic, Dongfeng Motor will also actively carry out employee relocation and resettlement work, which mainly includes retaining personnel to deal with legacy issues, retaining personnel to develop new businesses, and negotiating for termination. For those who have a labor contract, Dongfeng Motor will terminate the labor contract in accordance with the provisions of the labor law.

Dongfeng Group and Renault Group emphasized that Dongfeng Motor Group Co., Ltd. and Renault Group will also strengthen cooperation with Nissan. It is reported that Dongfeng Motor, which has completely taken over Dongfeng Renault, will also transform and upgrade it. After Dongfeng takes over Dongfeng Renault, it will upgrade the Dongfeng Renault factory and build it into a Dongfeng intelligent manufacturing production base.

Group Renault and Dongfeng Motor Group Co., Ltd. will continue to cooperate with Nissan on new generation engines. The cooperation includes providing parts to Dongfeng Renault after Dongfeng took over, and providing diesel engine licenses to Dongfeng Motor Co., Ltd. Groupe Renault and Dongfeng Motor Group Co., Ltd. will also carry out innovative cooperation in the field of intelligent connected vehicles.

It can also be seen that since there is no hope of recovery, it is not surprising that Dongfeng Renault, which produces passenger cars, is in the eye of the storm to adjust. As far as the current market situation is concerned, stopping Dongfeng Renault in time is the best choice for both Dongfeng Motor and French Renault.

This article comes from the author of Autohome Chejiahao and does not represent the views and positions of Autohome.