Author Topic: RNO - Renault SA  (Read 10926 times)

Edward

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RNO - Renault SA
« on: December 18, 2012, 07:12:33 AM »
Greetings and salutations!  ;D

Introductions and disclosure: I fancy myself a value investor. I have been investing in Renault for about 2 years, learning quite a bit about the auto industry in the process. Not a native English speaker, originally from the good old USSR and living in Israel.

Love this forum, been browsing a lot, especially the AIG/BAC and FTP threads. Good stuff going on. Onwards to reviewing Renault!

TLDR version: Good company, great management(Carlos Ghosn). No net debt. Trading at EUR 12B while its holding in Nissan is trading at EUR 13B, meaning Renault itself is priced at EUR -1B(that's a minus one billion euros). No net debt at Nissan either, great company, same management. Sum of parts valuation is probably EUR 25B not accounting for lots of growth and other significant things.


Long winded version:

Renault has a great history as an innovator in the automotive world, with the Renault 5, the Espace and other iconic cars. They also manufacture great engines and powertrains and supply 4 different Formula 1 teams.

In the 80's and 90's the company was still mostly French government held and it stagnated somewhat. Enter Carlos Ghosn(http://en.wikipedia.org/wiki/Carlos_Ghosn).

Ghosn started his career at Michelin(the tire maker) and was promoted to manage the entire South American operation at the age of 30, tasked with turning around the operation struggling under the south american hyperinflation. Succeeding in that he was promoted to managing North America at Michelin. In 1996 he joined Renault as a senior executive, as Renault was privatized.

His big moment came in 1999, when Nissan was on the verge of bankruptcy after trying several recovery plans for almost a decade. Renault eventually got a 43% stake in Nissan(and Nissan got 15% in Renault) for 5B$. At the time Bob Lutz said they would have done better to dump the money in the pacific ocean.
http://www.businessweek.com/stories/2005-01-16/the-gaijin-who-saved-nissan

In 2000 Nissan turned a good sized profit and remained profitable. Today it's debt free and growing 10%+ a year globally. Ghosn became a godlike figure in Japan as a result. It was highly unusual at the time for a foreigner to manage a large Japanese company(still is), and successfully at that. He remains the CEO of Nissan.

In 2005, Carlos Ghosn was appointed CEO of Renault, and have been managing both companies simultaneously until this day. He has a COO in each company to deal with day to day operations.

During my review of Fiat, I saw some similarities between Ghosn and Marchionne. Both have a multicultural background and have led great business turnarounds. Ghosn is slightly younger and it would seem that he is about 10 years ahead of Marchionne from a career development perspective. Also he strikes me as having less rough edges when dealing with people. But the main differences to me are: Managing acquisitions and business strategy.

Renault-Nissan is structured as an alliance, not as an acquisition. Nissan remained an independent company and is actually twice as large as Renault today. The two companies share capacities, distribution channels and technology but keep decision making and strategy separate. A lot of analysts have been historically pushing Ghosn to share more platforms and integrating more, but Ghosn resisted. He believes that there is more strength in voluntary cooperation and diversity that in one player swallowing another. This was so far been true as the alliance is going strong for over 12 years.

In stark contrast to this approach, you have the 1998, 36B$ Daimler acquisition of Chrysler, originally dubbed "a merger of equals". It went super-badly and Daimler eventually unloaded the entire thing in 2007 at a tenth of the original price. According to Dieter Zetsche(my interpretation of his narrative), they tried to impose the German way of doing business on the Chrysler culture and failed. It is curious that the same company was acquired again in 2009 by Fiat expecting a different result, although it would seem that this time around Chrysler was in such bad shape that no one resisted Fiat swallowing it. As of today it looks like a success story, but time will tell.

Another interesting difference is business strategy. Both Ghosn and Marchionne do the basics very well - utilize capacity, share technology, cut costs, deal with unions. However, this is only good for making the existing operation work well as is. To remain competitive, a company must grow and develop in new directions. This is seen on three different levels: New markets, New segments, New tech.


New markets: In the early 2000's, Renault and Nissan decided to expand globally, so they decided that each partner will maximize investments in another part of the world. Renault got Russia, South America, and India. Nissan got China.

In 2002, Nissan entered China from scratch. Today they sell 25% of their volume in China. Other significant markets for Nissan are the US and Japan.

In 2002, Renault was selling 80% of its cars in western Europe. Today it's 49%, and 45% last quarter. Also, a significant part of the cars Renault sells in Western Europe are actually low cost cars under the Dacia brand, which competes(successfully) with Korean cars, and in other parts of the world with Chinese, Russian, and Indian cars. Today, Renault is the leader in Russia and also controls AVTOVAZ, the ex-soviet car manufacturer of the Lada brand with 25% of the Russian market. It also has significant operations in Mexico, South America, North Africa, the Middle East, and lately it has become very successful in India with the Renault Duster model.


New segments: In 1999, Renault bought Dacia, a Romanian car manufacturer famed for poor quality on par with the most atrocious Russian cars(by Lada, mostly :)). The French integrated Dacia fully and transformed the brand into well built, reliable, cheap cars for developing markets. The first car was the Logan, an 11K$ C-segment sedan with above-average ground clearance and a suspension build for bad roads. Later variants built on the same platform were the Sandero(B segment), the Duster(an SUV), and lately Lodgy(a minivan) and Dokker(a small light commercial vehicle, Kangoo style). These are generally spartan(although you can add a lot of goodies as extras), but are almost half price compared with European models, and at a similar price to local manufacturer offerings in Russia, India, and China.

This is something that to my mind other European, Japanese and possible American manufacturers are missing when they come to developing countries with their Ford Focus, VW Golf, or Honda Civic. These are extremely expensive and not good value for money for most people in the third world. Hence they enable the ascension of currently local but soon global competitors in China and India, who produce much, much cheaper cars and soon to be not-so-bad cars exported in masses to Europe and the US.

Currently Renault are working on a new project - a 5,500$ car for India. Carlos Ghosn is a fan of the (not too successful)project of Tata to produce a 3,000$ car and thinks it should be a goal of any manufacturer that wants to make profits and take market share in the developing world.

Curiously, the Dacia brand has become pretty successful in recession stricken Europe. When a gallon of gas costs as much as it does in Europe, not a lot of cash is left over for that fancy sedan or hot hatch. Why buy an entry level VW polo when a fully loaded, top spec Sandero costs the same, and the basic model is almost half the price? Okay, it's not as safe, but it is more spacious, parts are cheaper, and warranty is the same.


New technology: The car industry is facing a revolution not seen since the days of Henry Ford senior. We are either past global peak oil or about to hit it in the near future. It is well documented and I am willing to debate it in a separate thread. This means increasing gas prices, or increasing transportation cost per mile. This makes alternative modes of transportation more and more attractive, as can be evidenced by higher hybrid sales in the US. However, Hybrid technology is essentially just a slightly more efficient way of burning the same gas in the same engine, and no better economically than a modern diesel. There is another way.

Electrification. It is immensely cheaper(not to say greener) to run a car on electricity. The Nissan Leaf consumes about 1 KWh per 3.5 miles. If electricity is 12 cents a KWh, it means that "fuel" for one mile costs 3.5 cents in electricity, and on some night tariffs it can be closer to 1 cent per mile. With gas at 3.5$ a gallon and an 30 mpg car, a mile costs 12 cents. In Europe its closer to 25 cents per mile because of extremely high taxes on gas.

The problem with electric cars is mainly the battery. It is expensive and heavy. However, even with today's batteries it makes financial sense to buy an electric car, especially in Europe. You also get much better performance than a gas car, it is quiet, and there is no oil, gas, or heat to worry about. Currently the best example of that is the Tesla model S. It is the best performance sedan over 50K$, outcompeting any similarly priced sedan by Mercedes or BMW on performance, gizmos, handling, and safety. Although Tesla hasn't even turned a profit yet and sold barely 2,000 cars over 5 years, it has a market cap of almost 4B$.

So how is all this related to Renault?

It turns out that Renault-Nissan invested 5B$ in recent years developing electric cars, and even started its own battery manufacturing company. Carlos Ghosn sees the technology as the (pretty near)future of commuter and city cars, and a way to leapfrog Toyota on the technology front. In the US and Japan, the Nissan LEAF is already been selling for 2 years producing some of the best owner's satisfaction ratings of any car(with the Chevrolet volt, another plug in). However, Renault already has not one car but a full lineup.

Renault has an electric Fluence sedan, an electric Kangoo LCV, a small electric go-kart called Twizy(very funky and my favorite) , and the new Zoe, a B segment car that is to be the best seller of the lot in Europe. All cars have plant capacities ready to be produced by the tens of thousands today, with a possible ramp up to hundreds of thousands in 5-10 years in case of commercial success.

As far as I am aware, no other company except Tesla and possibly GM has any decent EV technology or product. I looked at BYD, all EU manufacturers, Ford, Koreans, Japanese - No one is seriously investing in this approach aside for some California emissions compliance cars or concept cars. I find this to be a major oversight because from an outsider's standpoint this approach makes too much sense.

Two additional pointers from history to the possible development of this technology.

When Toyota started selling its Prius in late 1997, no one paid any attention, at the time for good reason. The car lacked performance, was small, and expensive. There was no reason to buy one unless you were a raving greenie. So sales were pretty weak for the few first years in Japan - 17K units in 1998, and declining to 6.7K units in 2002. Sales in other markets picked up some of the slack but still, in 2002 it seemed like a total flop with 5 years of weak sales. Today, Toyota is selling over 500K Prii a year globally, and other hybrids using the same technology as well. To this day, Toyota sells around 70% of all the hybrids in the world. It is a major success for them and their brand. And the most funny part? Hybrids still don't make real economic sense to buy vs a modern diesel. So while a success for Toyota, hybrids remain a niche with 2% of global market share.

The Nissan LEAF so far actually sold better than the Prius in 1998-1999. It also has better space, performance, and is greener. It makes economic sense for some buyers today, and with further development of the battery has the potential to make economic sense for a lot higher portion of the population than the Prius ever will(This can be debated on a different thread). So I believe that it can be massive success for Renault, and if it fails, it doesn't detract anything from the thesis as a whole. Upside only as far as I am concerned.

Another point is about survival in a changing environment. In the early 20's, most people still used horses. Of all the carriage makers of the time, only one survived the shift to cars. It was the Studebaker company, and it too disappeared in 1967. At the time, no one though that cars will catch on. When a car got stuck, people shouted "get a horse!". Cars were hugely expensive and unreliable. Most cars at the time cost around 100K$ in today's money(2,000-2,500$ at the time). Henry Ford took this concept and made a car for around 500$, or 25,000$ in today's dollars which was quite affordable. This is exactly what Renault and Nissan have done with the Renault Zoe and the Nissan LEAF. They created an affordable electric car which is better than today's cars in most respects. Now when an electric car runs out of juice, people shout "Get a REAL car!". History doesn't repeat but it rhymes. 

What will happen to a car manufacturer that is stuck perfecting the proverbial "buggy whip" while a competitor is selling the next generation product? I'd bet that the last guy producing buggy whips made some amazing product which left a lasting impression on driver and horse alike, but he too was gone.


Now, after the introductions are over, we can get back to basics. What is all this actually worth to an investor?

Lets first look at the extent of the possible upside in a few years.

The automotive segment of Renault is currently making around EUR 0.5B a year on sales of around EUR 36B. As soon as Europe recovers somewhat, they should make around 1.5B$ in net profit. It is in line with the long term operating margin goal of 5%.

The RCI banque(the captive car finance company) makes a steady EUR ~0,5B.

Nissan is currently making around EUR 3B on sales of 80-90B. Goal for 2016 is 8% operating margin. Current growth at 10%+ a year combined with 8% margin should mean around EUR 10B operating profit in 2016 and net profit of around EUR 6B. Renault's stake is 43% for 2.5B of the net profit.

This means that the net profit of Renault might be in the order of 1.5+0.5+2.5 = EUR 4.5B. I would put a P/E of 10-12 on that and call it a EUR 50B company. Note that this excludes some additional value.

It excludes the stake in AVTOVAZ, which is probably worth EUR 1B or so. It also excludes any future upside from leadership in electric car technology. I prefer not to value it but look at it as downside protection - if it catches on(as I believe it should), it's going to be big. 1912 Ford motor company big. Why downside protection? Because if the shift happens, some car companies might disappear. If oil hits 200$, a lot of people will look seriously at electric cars today. Alternatively, if oil stays at 100$ and a few years pass with improved batteries, same effect. It can be a game changer and I couldn't hold an auto maker that isn't invested in this to some extent.


That said, the company is already cheap today based on today's numbers. Renault automotive is making EUR 0.5B a year, the finance arm another EUR 0.5B. Nissan is contributing 1.5B a year. This is EUR 2.5B a year in net profit, worth 25B-30B on a P/E of 10-12 with pretty low margins.

So in conclusion, the stock is probably worth EUR 80-100(+100%-150%) with today's meager profitability, and possibly EUR 160(+300%) in a few years, with great downside protection considering Renault has no debt and the stake in Nissan is worth more than the Renault market cap.

Let's get a debate started :)





« Last Edit: December 18, 2012, 11:31:10 AM by Edward »


PlanMaestro

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Re: RNO - Renault SA
« Reply #1 on: December 18, 2012, 08:57:15 AM »
Welcome and thanks for the idea.

Renault to sign Algeria factory deal
http://europe.autonews.com/apps/pbcs.dll/article?AID=/20121218/ANE/121219887/renault-to-sign-algeria-factory-deal

Renault is looking to Africa for growth, pushing rugged, no-frills models such as the Dacia Logan as its sales decline in Europe faster than any other major carmaker.

Besides being somewhat more expensive, my main concern with Renault compared to Fiat: no exposure to growing markets like the US or Brazil. On the bright side, Peugeot does not seem like it will make it and could leave an opening for Renault in the French market in the future.

To navigate the collapse of local sales, Fiat is planning to use its Italian excess capacity to produce the new Jeep lineup for the USA while Renault is investing in a plant in Africa for the low end.

Regarding Marchionne's edges, well, someone has to speak up to the Germans. And remember that Marchionne has gone through four deep hugely successful turnarounds (Alusuisse, SGS, Fiat, and Chrysler) while Ghosn only Nissan that had lots of strengths to begin with. I have to say that as a practitioner Marchionne's pragmatism resonates more with me that Ghosn's diplomacy.

http://en.wikipedia.org/wiki/Sergio_Marchionne

Regarding EV, everyone knows Marchionne's and Elkann's reservations (technology too early for primetime, everyone losing money on it) and their pragmatic emphasis on very efficient combustion engines might be too pragmatic. But let's see how the environmentally sexy 500e does. (these Italians know how to design a good looking car and sell it. hehehe.)

http://www.youtube.com/watch?v=rp06B8JU2hI
« Last Edit: December 18, 2012, 09:43:53 AM by PlanMaestro »

Edward

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Re: RNO - Renault SA
« Reply #2 on: December 18, 2012, 10:26:39 AM »
Europe is really in bad shape at the moment and Renault refuses to discount their brand to oblivion like other manufacturers(Volkswagen) to take or retain share. No surprise they lost market share last year. Also the lineup is relatively old, with the Clio 4 just out and some major renewals coming in 2013, next year should be relatively better. On the other hand the Dacia brand is doing well in Europe.

The comment about Renault having no exposure to growing markets is incorrect. Renault has 6% market share in Brazil, and Nissan has another 6%. Renault is also the market leader in Russia. It has a presence in many more developing markets, such as Turkey, Algeria, and India. Nissan sells quite a lot in the US and China(the US is not a growth market, more of a recovering market, like Europe is likely to be in a few years). Fiat essentially has 3 markets - US, EU, Brazil.

If you look at the sales of Renault, they will sell 1.3 million cars in Europe this year, 200K of these being Dacia models. Also they will sell 1.3 million cars outside of Europe in growing markets, or 50% of sales.

Also, Nissan will sell around 4.8 million cars in 2012, a quarter of them in China, another quarter in the US.

I agree Renault is slightly more expensive if you look at the obvious upside only. However, it has significantly less risk than Fiat. They can afford to make mistakes while with Fiat, as Marchionne has said in a "60 minutes" interview early this year, can only handle one bad car launch, "just one". I really am a fan of Marchionne's strategy  but fundamentally he is not in charge of a strong company and there is not much margin for error there.

I am not really aware of what Marchionne done in Alusuisse and SGS, and the Chrysler story is still a work in progress. But I have reviewed Fiat and can render an opinion. He has done a great job with the fundamentals and made the company profitable as it was. And here lies the problem. They were already very successful in Brazil and remained so. They have always been big in Europe and so they remained. Nothing really changed in a strategic sense, and when the 2008 crisis hit, they had no outside markets except Brazil to lean on and expand in. They also did not develop the lineup until they acquired Chrysler which filled most of the missing pieces. Also, I have to say I was not impressed by Fiat's margin pre-crisis(3.5% operating if I recall), not that Renault was any better really. So in effect, they are at the same spot Renault-Nissan were 10 years ago, but have to actually compete with Renault-Nissan of today.

Ghosn really developed new markets for Renault and Nissan, and expanded the lineup to include every segment. Also the Dacia brand is a very important development. I would love having Ghosn as CEO and Marchionne as COO but that would probably never happen :)

As for EV's:

Frankly, each and every carmaker has the same reservations regarding EV technology as Fiat. Hence almost no one has a real product on the market.

The fiat 500e is what is known as a "compliance car", not a real product but an expensive conversion. See here:
http://green.autoblog.com/2012/05/30/marchionne-were-only-making-fiat-500-ev-because-californias-f/

Very low volume, probably losing 10K$ on every car. Renault and Nissan actually plan to make better than average margins on its electric cars.

« Last Edit: December 18, 2012, 11:44:58 AM by Edward »

PlanMaestro

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Re: RNO - Renault SA
« Reply #3 on: December 18, 2012, 12:20:36 PM »
Before I try to address your points, let me say that is not that Renault is a bad company, that it isn't cheap,or that Ghosn is a bad CEO (he is great). I just think that Fiat is  better and cheaper, and that Marchionne is one of the best CEOs that I've seen in the auto industry, and not just in the auto industry. Also the questions that I put forward about Renault are real questions, I don't know it as well as Fiat.

Other Markets: Sure, Renault/Nissan has presence in other markets. For example, they're big in Mexico and I have visited their Aguascalientes facilities (top notch).

But after the merger Fiat/Chrysler is only like 25% Europe and not just cruising Brazil but dominant with 10% operating margins. Renault/Nissan is much more dependent on Japan and Europe with around 50% more or less?

And what is Renault doing with their excess capacity in France, and how much are they losing while they wait ( I don't really know and would like to know)? Do they have the upscale product to move so that transportation costs from France would be worth it?


Fiat Risk: To understand the "one car" comment you have to understand Fiat's history and how it differs from today. Fiat historically depended on the mass market, and that means family, compact and sub-compact cars. That is very similar to other companies. Toyota cannot afford to screw a Camry or Honda to screw an Civic. Well, maybe they can now because they have a balance sheet that Fiat did not have for most of the 80s and 90s.  So to say that Fiat was "saved" several times thanks to the Uno, Punto, Panda is because no mass market automaker can screw that market. And it is good that Marchionne is thinking about that possibility. Imagine if Nissan screws a Sentra.

The difference is that Marchionne was open about it during the Fiat turnaround in the 2000s. As he was outspoken about the European Carmageddon or as he was negotiating JVs with American automakers and asked them repeatedly if they were ready for a 10 million cars market.

Now Fiat can afford "one car", and probably more. They have the balance sheet, they have the cars (new Jeeps, Alfa Romeo entering USA, the 500), and they have a CEO that lives thinking about downside risk. There is much more room for error now in Fiat.

And you get the best 1-2 capital allocators in the auto industry (Elkann and Marchionne) for free.

Chrysler turnaround: check the numbers: close to full capacity, gaining share, and high single digit operating margins. Is not a turnaround anymore.

"Nothing really changed in a strategic sense": Well everything changed in the strategic sense. Chrysler did not have the engines, now they do. Fiat did not have SUVs, now they do. They have the economies scale (6th largest automaker, same size as Ford) for the mass market and the luxury product to compete with the Germans. Marchionne was there at the Chrysler table, Ghosn was not.

EV's and 500e: We agree that each and every carmaker has the same reservations regarding EV. At the current volumes, the Leaf and Volt will not make money either. The problem are the fixed costs with low volumes, that is a bet on the future. But they are all investing in it, but Sergio is the only one that says what everyone is thinking. His background is financial, he cares about these things. Others are more concerned about the future, but they will still lose money on it for the next few years, Renault included.

Bob Lutz on the Volt: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/general-motors-gm/msg86019/#msg86019
« Last Edit: December 18, 2012, 01:06:21 PM by PlanMaestro »

Edward

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Re: RNO - Renault SA
« Reply #4 on: December 18, 2012, 01:20:12 PM »
But after the merger Fiat/Chrysler is only like 25% Europe and not just cruising Brazil but dominant with 10% operating margins. Renault/Nissan is much more dependent on Japan and Europe with around 50% more or less.
According to November sales figures, it looks like Fiat will sell 1,100K cars in Europe this year, 2,000K in North America, and close to 1,000K in South America. Fiat holds around 60% of Chrysler currently, so it only consolidates 1,200K of North american sales. So that means Europe is around a third at the the moment, to become a quarter only when the rest of Chrysler will be acquired. I actually view Europe as potentially having more upside than North America due to the relative distance of current market sales vs sales volumes pre-crisis. North America is in Mid-recovery mode while Europe is still deep in recession.

Your estimate regarding Renault-Nissan is incorrect. Nissan only sells around 15% of its volume in Japan.

Looking at Renault, by itself it has 50% of its volume in Europe, if viewed apart from Nissan. Same as looking at Fiat apart from Chrysler, as stand-alone Fiat has over 50% in its sales in Europe.

However, when you add the proportional sales of Nissan into the mix you get a very different picture: 30% of sales in Europe, 6% in Japan, 13% China, 13% North America, etc.

Now Fiat can afford "one car", and probably more. They have the balance sheet, they have the cars (new Jeeps, Alfa Romeo entering USA, the 500), they have the balance sheet, and they have a CEO that lives thinking about downside risk. There is much more room for error now in Fiat than Renault.
I find it hard to agree considering Fiat has a few billions of debt vs Renault having none, from a balance sheet perspective at least. The quality of both businesses is debatable, but you have to agree that Fiat has to work hard in the next few years building a complete line-up in every segment, and further integrating the two companies. This work has essentially been already done at Renault-Nissan, hence no execution risk vs some risk in Fiat.

As for getting Marchionne for free - I'm not sure if I prefer him to Ghosn. Both can get the job done.

Chrysler turnaround: check the numbers: close to full capacity, gaining share, and high single digit operating margins. Is not a turnaround anymore.
Number wise it is not a turnaround any more, but only with time can you really tell if the corporate cultures are fully compatible. I think the Daimler acquisition of Chrysler is instructive in this regard.

"Nothing really changed in a strategic sense": Well everything changed in the strategic sense. Chrysler did not have the engines, now they do. Fiat did not have SUVs, now they do. They have the economies scale (6th largest automaker, same size as Ford) for the mass market and the luxury product to compete with the Germans. Marchionne was there at the Chrysler table, Ghosn was not.
I was referring to Fiat pre-Chrysler acquisition. Marchionne couldn't have anticipated he would have Chrysler falling into his hands and solving most of his problems before 2009. What was he doing for 5 years before that? Why wasn't he entering new markets and expanding his line-up?

I agree Chrysler plugged most of these holes, but I wonder what would have become of Fiat without Chrysler, frankly.

As for why Ghosn wasn't at the table - it is not a good strategic fit. Nissan has a good line-up in North America and it is more crucial to invest the capital in developing markets than in a mature market like the US. It is not really a growing market any more but more of a cyclical one like Europe.

However, Chrysler was a great fit for Fiat and I'm glad they made the move.

EV's and 500e: We agree that each and every carmaker has the same reservations regarding EV. At the current volumes, the Leaf and Volt will not make money either. The problem are the fixed costs with low volumes, that is a bet on the future. But they are all investing in it, but Sergio is the only one that says what everyone is thinking. His background is financial, he cares about these things. Others are more concerned about the future, but they will still lose money on it for the next few years, Renault included.

Bob Lutz on the Volt: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/general-motors-gm/msg86019/#msg86019
Renault-Nissan have to sell at least 500K EV's per year to make it a profitable business. It is a bet on the future, but it is important to understand that the combustion engine has a limited future. You can't sit and wait for your product to become obviously obsolete but have to innovate to survive long term. This has to be started early for you to have a competitive edge.

Regarding the assertion that everyone are investing in it - there are leaders and there are followers. When there is a technology shift, the winner takes it all. Consider that Renault-Nissan invested billions while the next biggest investor in EV technology is actually a start up from California named Tesla with a 1b$ investment. Most car makers have various pilot programs but that means they are years behind in the development cycle at best. Nissan had these programs going in the 90's.

By the time they get a decent production EV going(if at all, I wonder), Renault-Nissan would be at least 5 years ahead. Just like with Toyota and its hybrids. But unlike hybrids, EV's are not a technology for 2% of the market. It fits at least 30% of the market in the B segment for example.

There is no real financial risk going forward regardless - the 5B$ investment has already been made and is out the door. Even if amortization of the investment shows a loss, cash is coming in on every sale.

Bob Lutz is talking about the Volt - which is not an EV like what Renault-Nissan are doing. Elon Musk explains the difference in the approach:
http://www.youtube.com/watch?v=Fp_K71MM6Xk

 
« Last Edit: December 18, 2012, 01:42:10 PM by Edward »

PlanMaestro

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Re: RNO - Renault SA
« Reply #5 on: December 18, 2012, 02:33:31 PM »
Glad that you recognize the turnaround at Chrysler and the great strategic improvement at Fiat. I also appreciate your insights on Nissan EV and global efforts. On the rest we will have to agree to disagree a lot.

I hope to hear also more of your data and insight on the other auto discussions. Welcome.

(and until next year, time to fly to the turquoise waters and white sands of the Yucatan peninsula)

Liberty

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Re: RNO - Renault SA
« Reply #6 on: December 18, 2012, 02:36:33 PM »
Welcome to the board Edward, and thanks for sharing this idea.
"Most haystacks don't even have a needle." |  I'm on Twitter  | This podcast episode is a must-listen

rjstc

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Re: RNO - Renault SA
« Reply #7 on: December 18, 2012, 05:43:44 PM »
Yes, welcome to the board Edward. One comment. Marchionne's comment about the one car. I think that was a very shrewd comment. One to the unions about don't over ask for the sale price you want. Two for the rest of the company. You'd better be good at what your doing, you're on a short leash. This gives them a great incentive to not screw up, to stay focused.

Edward

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Re: RNO - Renault SA
« Reply #8 on: December 19, 2012, 12:09:31 AM »
With Peugeot deep in trouble, Peugeot management announced the closure of the Alunay plant and some restructuring earlier this year. The French government immediately resisted and decided to appoint an official to investigate. The official found that indeed, Peugeot must restructure as they planned. Now, the French auto workers are left all alone and Renault sensed an opportunity.

Renault has been negotiating with French auto unions over the last month or two with Ghosn making similar comments - Renault might disappear in its current form etc, an appropriate tactic considering the circumstances. It reminded me very much of Marchionne's comment on 60 minutes about the one car.

I think it is important to take a look at the balance sheet as well to get a full picture of the strength of a car company or lack thereof, aside from CEO comments in the media.

« Last Edit: December 19, 2012, 01:46:25 AM by Edward »

Edward

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Re: RNO - Renault SA
« Reply #9 on: December 19, 2012, 03:25:51 AM »