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Renault dealer and product cull as network fights for profit

Renault UK will cut its franchised dealer network by almost a third this year as the French brand conducts a massive reorganisation to bring its infrastructure and product range into line with its market positioning.

Its total number of sales points will reduce from 190 to around 135 by 2013. Partners were informed at its annual dealer conference in Birmingham mid-December and were sent formal termination letters at the end of December, giving the legally required 12 months’ notice of network reorganisation.
“The majority of the network’s reaction to our action plan was positive because they’ve expected such action,” said managing director Thierry Sybord.

He added that many dealer chiefs realised the measures were necessary to make the core business in the UK healthy.

“It’s not an easy decision to make because it’s a real breakthrough.

“I’ve been here just over a year and we have tried to stabilise the volumes, but it hasn’t worked, nor from a profitability point of view.

“And it’s not just the profitability of Renault but also the profitability of the network.”

AM understands 50% of the net-work has been running at a loss.

The plan forecasts a 29% reduction in its main dealers, which number around 150, while its smaller retail dealers, some 36 sites, will contract by 68%.

Its 21 manufacturer-owned dealerships, in Renault Retail Group, will be included in the review.

The key criteria for the re- organisation will be optimising geographical coverage, reducing overlap of market areas, while Renault hopes to maintain service coverage in remote locations.

Some of the dealers which stay may relocate to smaller showrooms, or multi-franchise.

At Renault Retail Group, which already has three sites partnered with alliance brand Nissan (Bolton, Leicester and Liverpool), further such collaboration is under consideration.

Survivors will be expected to invest in standards, including the continued roll-out of ‘Project Air’ showroom identity, to ensure
that the customer experience is right and consistent.

For the first time, in 2012 Renault’s dealers incentives for customer sat-isfaction will out-weigh those for sales volume.

Dealers’ CSI scores are already revealed to the public each month via Renault’s website, alongside verbatim comments.

Head office cuts

Sybord said the network had struggled for profitability as Renault UK’s new car volume had fallen and the reorganisation would improve this.

The current average of 400 sales per site will increase to 600 – a level not seen since 2005 – driving up dealers’ returns.

“We know if we continue with our same efforts we will get the same results,” said Sybord.

He presented the plan to Renault’s global chief executive Carlos Ghosn and chief operating officer Carlos Tavares and has their full backing.

Without such changes, the forecast was to continue making a loss for the next three years.

Asked if he expected to be taking such dramatic action when he was offered the UK post in mid-2010, Sybord said he did not as the economic upturn and currency situation looked more positive then.

But he is certain the action is necessary now and said the decisions had not been taken lightly.

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  • kevthebass - 15/06/2012 12:16

    So dealers that survive this cull are expected to invest £000s in a slightly different shade of grey showroom tiles etc. When will manufacturers realise that this spend will not bring in one single extra customer nor improve customer service levels which depend on people and process. Funny how recently during a week touring France most french Renault dealers appear not to meet the UK franchise standards from 20 years ago never mind the current requirements. My local BMW Motorcycle dealer, of 14 years, was told by BMW to relocate 18 miles to a city location, spending £2.5 million in the process. They didn't have the cash, want to incur the debt or see the need for it so they were terminated. The "new" BMW Motorrad dealer is tagged onto a car dealership and has the same sanitised totally disinterested customer experience as most car dealerships. It's people and enthusiasm that make the difference NOT glass palaces.

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Renault Retail Group

Renault Retail Group is a national network of over 20 automotive dealerships and sells one in every four Renaults in the UK.

It is 100%-owned by Renault and was formed in 1996. To-date the group has sold over 350,000 vehicles in the UK.

Annual turnover in 2010 was £513 million with full-time staff numbering more than 1,000.

In 2010 the group appointed Stuart Walker as managing director from the post of deputy MD, succeeding Ian Plummer who was promoted to Renault UK’s director of commercial operations. Walker also heads up the group’s Nissan operations and its used car franchise Autoworld.

The group suffered particularly during the 2008 recession, with sites closing or undergoing restructuring as it sought to streamline the business wherever possible.

Plans to redevelop its flagship London West site at a cost of £9 million were also shelved.

RRG is also a member of online used car sales website established by Perrys, Vertu Motors and Lookers bosses Ken Savage, Robert Forrester and Peter Jones.

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