A key part of Ghosn’s vision to become a top three global automaker rests on success in markets such as China and Russia. China is Nissan’s biggest single market, accounting for a quarter of the Japanese automaker’s sales.
The alliance will soon gain full control of Russia’s AvtoVAZ, which builds Lada, the country’s top-selling brand. In China, Renault will begin producing crossovers in 2016 in a new joint-venture plant with Dongfeng Motor, which is Nissan’s partner. The factory will have an initial annual production capacity of 150,000 vehicles, with the potential to double that number.
Renault has arrived late in China but its regional boss, Jacques Daniel, told Automotive News Europe that he believes there is plenty of potential for the brand. Renault’s midterm goal is to sell 600,000 to 700,000 vehicles a year in China and to have a 3 percent market share.
Analysts are optimistic about Renault’s future in China.
“They are not going to enjoy margins similar to ones we have seen among German carmakers three years ago, but Renault’s investments will not be a waste of money. There is still growth in that region,” Exane BNP Paribas’s Freiha said.
Said IHS Automotive’s Fletcher: “The strategy that has been laid out is pretty realistic given that it focuses on higher-margin, popular crossovers that it will also sell in Europe. Renault will also seek to leverage the French-ness of the brand and the kudos this can have with Chinese consumers.”
In 2007, AvtoVAZ surprised many when it rejected General Motors and Fiat as a potential strategic partner, opting instead for Renault-Nissan. Ghosn’s bet on Russia has yet to yield substantial results.
With the downturn of the Russian market, which was once forecast to overtake Germany as Europe’s largest as early as this year, the alliance’s investments to modernize the outdated Lada brand and upgrade its huge Communist-era factory in Togliatti seem a bad move.
But Ghosn, who is AvtoVAZ chairman, takes a long-term view. He is encouraged by Russia’s growing middle class, low car density and an aging fleet. “I’m bullish on the market, I recognize the fact the market declined last year and will probably decline this year, but when we invest we engage not for this year but five, 10, 20 years down the road,” he said in Moscow in April when he unveiled the on-Do sedan, which is being launched in Russia by Nissan’s revived Datsun entry brand.
Analysts see the recruitment of former General Motors purchasing chief Bo Andersson as AvtoVAZ CEO as a good move.
Andersson, a tough cost-cutter, is credited with turning around Russian bus and truck maker GAZ. Deutsche Bank’s Toulemonde said Andersson could help the alliance’s Russian operations to earn double-digit margins.
“Russia can definitely become a nice profitable business for Renault-Nissan,” he said.
IHS’s Fletcher agrees: “There is still a great deal of long-term potential in the country’s market which Renault-Nissan is well placed to capitalize on given the scale of AvtoVAZ/Lada compared to its competitors,” he said. “I think the business’ position will only improve once further Renault- and Nissan-based models reach the market.”
Ghosn said in Moscow that the Renault-Nissan-AvtoVAZ alliance aims to take a 40 percent market share in Russia, although he did not give a time frame. Renault, Nissan and AvtoVAZ currently have a combined share of 32 percent.