Expansion of the Renault now is insufficient

Some automakers are starting to realize that its current expansion projects in Brazil could have been larger. Renault inaugurates today in São José dos Pinhais (PR) a work of expansion that will add production of 100 thousand cars per year, which equates to almost a new factory. But this does not represent any relief. The line will continue to operate at maximum capacity, in three shifts. The world region Americas Director, Denis Barbier, who came to the country to this inauguration, agrees that the situation leads the company to think about a future expansion. But this should only occur from 2016. Until then, the automaker intends to increase participation in the internal market from the current 6.6% to 8%.
The reason for the travel of the Director of the Paris region Americas to São José dos Pinhais is far more enjoyable than the reason that six years ago led his boss, Carlos Ghosn, the President of the company, to do the same. Ghosn had just take on the Chief Executive of Renault when he decided to visit the Brazilian factory. The climate was of dismay. The idle capacity that he found in the State of Paraná, of 70%, surpassed that of Nissan, which was 50% at the time when he himself was cast to save the Japanese automaker from bankruptcy in 1999. With only one work shift, the climate in the State of Paraná was order to expediently during more than half of the day. to make matters worse, the Executive received the results of a survey of Brazilian consumers: half of them did not know that Renault had a factory in Brazil. That day, Ghosn promised a turnaround.
Opened in December 1998, Renault do Brazil seems to have been in setback for much of its history of industrial activity in the country. At the beginning, were successive years of bad financial results, such as the loss of r $ 1.4 billion in 2002. The first profit, of $ at 169.5 pounds million, appeared only in the balance of 2007 and, even so, the following two years were bad, with almost no profit in 2008 and more prejudice, of R $ 262,3 million in 2009. From then on, the company closed with profit of R $ 232,8 million in 2010 and $ 215,7 million in 2011, according to the annual "Value 1000".
Now, the scenario is another. According to the company's balance sheet, in 2012, the high of 9% in sales outside Europe compensated the fall of 18% on the European continent. Today, half of all vehicle sales of trademark is held out of European markets. But this slice tends to increase, says Barbier, who works at Renault since 1984 and assumed the direction of the Americas for three years. In your hands is the command in the region with one of the biggest potential for growth of the brand in the world. He said sales in the Americas have doubled in three years. As the brand does not act in the United States, Brazil leads the region, totaling 450 thousand vehicles per year. In 2011, the Brazil surpassed Germany and went on to be the largest market for Renault out of France.
If that visit six years ago, Carlos Ghosn returned to France concerned about what he saw in São José dos Pinhais, Barbier this time is likely to animate with the mood of celebration in the new facility. Almost no construction works were made because 60% of the 2.5 million square meters of land on which is the assembler are preserved forest. But, internally, there were many structural changes in important and strategic sectors, such as assembly line and spray booth. The factory received new robots and since 2001 have been opened more 1.2 million jobs, which raised the frame to 6.5 thousand workers.
The expansion will boost the annual production volume of 280 thousand to 380 thousand vehicles. Knowing that the automaker will continue to operate at full capacity even though the expansion is not yet a cause for concern, according to the President of Renault, Olivier Murguet Brazil 's. He says having an additional breathing space, though small, until 2015, when it will end the current investment plan, of r $ 1.5 billion. Only the factory reform consumed US $ 500 million. The remainder of the investment programme, started in 2010, includes renovation of products and releases. "We increase the supply of models in segments where we are not yet present," says Barbier.
Possible lack of capacity can also be resolved otherwise. Even though the direction of the company avoid dealing with the matter in detail, there is a possibility of the Renault move to use full capacity of light commercial factory that now shares with partner Nissan. This is a facility nearby to the line of cars. In this building are produced the Master models, of Renault, and Livina and Frontier, Nissan. Nissan's production can even be transferred to Resende (RJ), when the Japanese brand factory be ready in 2014. Now ponder also the utilization of the Alliance between the two marks. This would include operations of Renault Nissan factory on the River. Barbier admits Alliance synergies in Brazil take advantage, but prefers not to extend in the comments on the assumptions.
For now, the French Executive celebrates the expansion of the region that is under your command and if satisfied with the willingness of the Brazilian Government to give more benefits to companies that produce in the country. "Some measures make us evolve," he says. The Innovate-Auto, automotive system that provides higher taxes for vehicles imported or assembled here with low levels of nationalization, helps company to align international growth strategy. Like other automakers, Renault has chosen the industrial activity in the Bric bloc (Brazil, Russia, India and China) as the way to compensate for the losses it has suffered for having passed many years excessively dependent on its home market.
Barbier knows, however, that in Brazil the dispute will be on the domestic market. It is time that the automakers have lost former export contracts for other countries. Brazilian Renault itself no longer exports to Mexico because the Colombian branch proved to be more competitive in selling the Sandero model, also produced in Brazil. "In fact, unfortunately today the high costs in Brazil do not allow us to export to the markets of the northern part of the Americas," says Barbier.
With annual volume of 3.8 million vehicles, the Brazilian market, the fourth largest in the world, is still large enough to absorb the local automobile industry's production. Barbier recognizes that, with the entry of new competitors, the fight will not be easy. But lessons from the past, that the company learned in unsuccessful attempt to enter the United States market, will this new phase of competition in Brazil, according to the Executive. "We need to study, get involved more in the lives of Brazilians to understand their wishes. The Brazilian market is demanding. The difference between the marks will be the quality of services and the ability to get products to the taste of the consumer. Those who do not meet this will not take place in that market. "