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UK regeneration plan is saving dealers £59,500, says Renault

Renault UK says the latest phase of its network regeneration plan has enabled dealers’ average profitability to remain static.

And that’s despite industry average profits reducing significantly in the current downturn, with latest figures showing average return on sales of just 0.1%.

Renault dealerships have each saved on average £59,500, and company executives believe a £148,000 annual saving per dealership, originally due to be achieved by the end of 2009, will happen by next June.

Key savings are interest charges (9%), salaries/admin (14%), demonstrators (5%), general expenses (7%) and advertising (15%).
The improvement is revealed as Renault cuts production so that year-end stock is in line with 2007 levels.

In October, Renault’s global sales dipped by 14.1% year-on-year – in Europe it was 16% down, compared with a market fall of 15%.

To ensure a closer fit between inventory and market demand, Renault says it will help dealers to reduce their inventory and fixed financial assets. A marketing plan has been agreed to reduce unsold stock.

A Renault UK spokesman said: “We’re helping dealers with extra support on any fully paid stock.”

Last December Renault UK and its dealer council agreed a strategy for a network regeneration plan. The key element was said to be the Renault 20 Plan, designed to cut overheads, along with sales and aftersales expenses.

Renault UK has changed its payment cycle to weekly from twice a month and provided six-month free funding on demonstrators (plus free cars for larger dealer groups). It says a reduction in tactical pre-registrations has reduced dealers’ used car stock holdings by 19% and improved residual values.

However, dealers may be concerned at diminishing assistance in sales and aftersales.

Renault will next year cut its support field team from 42 to 27 people after restructuring its regions from four to three.

A spokesman said this new approach would see staff focusing more on dealers that need help on customer satisfaction, profitability and efficiency.

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