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Dealers told to focus on service

Renault is making dealer performance a key element in a quality, brand and design review, as it embarks on its ambitious Commitment 2009 plan to increase sales by a third over the next three years.

Its dealers are required to pledge to deliver a high level of retail service, as Renault embarks on a programme to sharply increase its sales and operating margin.

Patrick Pelata, Renault vice president in charge of planning (including product), says: “We are buying a survey that combines the quality of our products and our service, and are asking dealers to give a commitment on their service. If they do not follow us, they will not be with us at the end of the road.”

Carlos Ghosn, Renault president and chief executive, has told all his dealers that he wants to reduce total distribution costs by 8% per unit across Europe. In 2005, Renault global sales topped 2.5m for the first time, rising 1.7% to 2.53m cars and LCVs. It intends to be selling 800,000 a year more by 2009 – rises of 250,000 in Europe, and 550,000 elsewhere.

Ghosn’s hope for 3.3m sales by 2009 means it is well short of the original 2010 target of 4m set by his predecessor, Louis Schweitzer, who by implication is now under fire for authorizing a design trail leading to Vel Satis and Avantime.

Ghosn is determined to raise last year’s operating margin of 3.2% (down from 2004’s 5.2%) to 6% by 2009. Renault’s share dividend of €1.8 last year has been given a target of €4.5 in 2009.

All these objectives are part of Renault Commitment 2009, which Ghosn revealed to journalists at a briefing in Paris the day before he addressed dealers live and by electronic links.

He told a press conference: “Renault has great potential, and assets include the alliance with Nissan, but the brand has been weakened and fragile. There is insufficient focus on customers and the drive for profit, and we must make one promise to all our global customers.”

“Design is also in the throes of deep discussion,” said Patrick Pelata, after Ghosn’s speech.

The future of Patrick le Quement, in charge of design since 1987, appears in doubt. “We want cars in segments where there are no rivals, because in that way we can charge more and make better profits,” said Pelata. “Our design image has been weakened: a few people like Mégane very much, but some people reject it.

“Mégane’s design is not the best, we could have done better.”

He was also critical of the design of the Modus (which has failed to hit sales targets), saying it was “not clear, not coherent – a bit lost”.

Pelata said it was important to decide on what customers regarded as ‘the red line’ on whether a car was bland, something Renault wanted to avoid designing.

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