Renault Trucks eyes its year in China
The journey was to commemorate the Year of France in China; and Renault Trucks hopes it would be its year, too, by obtaining the green light from the authorities for its joint venture (JV) with Dongfeng Motor Corporation.
"We believe we will have a decision within three months. The discussions on contracts are almost complete," Stefano Chmielewski, worldwide chief executive officer (CEO) and president of Renault Trucks, tells China Business Weekly
It signed agreements on a JV framework with Dongfeng Motor on January 27 as well as for technology transfer to make 11-litre engines to equip range of vehicles.
One way or the other, Renault Trucks is keen on setting up a JV here, even if it means it has to approach another Chinese company.
"We are confident Renault Trucks' technology is suitable for China; and Dongfeng Motor believes it as well," he says.
For the collaboration with Dongfeng Motor, "we are planning to invest a lot. But I cannot disclose the figures till we sign the final agreement.
"But let me put it this way. We have already decided to bring our cab technology to China. And to develop a new cab nowadays needs investment of about US$200 million.
"And if we get the green light, we could really start production very quickly," says Chmielewski confidently.
Renault Trucks started sales in China about three years ago, but has only a small market share.
The market in China is dominated by Chinese domestic manufactures and big OEMs (original equipment manufacturers). The premier heavy-duty truck market, which is highly profitable, has been grabbed by Volvo and Daimler-Chrysler .
Chinese truck sales are about 400,000 units per year, with the heavy-duty segment accounting for about 3,000 units.
The Chinese market has been difficult to penetrate for imported trucks because of changing regulations, rising price of oil and changing customer preferences.
Only the premier segment has been making profits and "that's why we are discussing collaboration with Dongfeng Motor to combine the technology of Renault Trucks and the manufacturing prowess of Dongfeng Motor," says Chmielewski.
"We believe we have the opportunity to grab a 10 per cent market share in China within two years."
Renault Trucks has selected 10 cities where it wants to develop European-standard dealers and service.
"Once we have consolidated in these areas, we will spread to others gradually," says Chmielewski. "This is our China development strategy."
Renault Trucks provides trucks for 16 industrial segments, from container, fuel transport, liquid transport and garbage collection to military usage.
"We have business all over the world. Now we are targeting China. Our global strategy is to build a strong presence in areas which have growing demand, like Europe and Asia. At the same time we do not forget the rest of the world, of course."
The Renault Trucks design has some inherent advantages. For example, Chinese-made trucks weigh about 1.5 to 1.7 tons more than the Renault trucks, which means a Renault truck can transport 1.5 to 1.7 tons more.
Chmielewski was in Beijing recently to attend the ceremony at the Great Wall Commune to celebrate the successful arrival of Renault Trucks Adventure Silk Road 2005, which set out from Renault Trucks' headquarters in Lyon on April 2.
Part of the Year of France in China, the journey "provided an opportunity to firm up Renault Trucks' relationship with China, especially on brand promotion, to enter the premier heavy-duty truck market," says Chmielewski.
Comprising six Kerax and two Sherpa trucks, the convoy took two months, as scheduled, to travel to Beijing.
The journey included some tricky roads, tracks, dunes and hostile mountain areas, but was completed without a serious incident.
The sturdiness, reliability, and endurance of the trucks were fully demonstrated over the course of this run, he says.
"It strongly proved the quality of our products and our strong commitment to
the Chinese market."