Thierry Moulonguet - Director and Special Advisor to the President of the Renault-Nissan Alliance
News Article -- February 09, 2011
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The automotive industry was particularly heavily hit by the crisis in 2008. Two years later, the Renault-Nissan Alliance has consolidated its financial situation and is moving forward with its major projects, driving technological innovation and growing in emerging markets. Regardless of what people say: 2010 will be start of the decade of the auto industry! interview with Thierry Moulonguet, Director and special advisor to the president of the Renault-Nissan Alliance.
Thierry Moulonguet: "The automotive industry is still pioneering"
The last three years have been difficult for the automotive industry. How has Renault weathered the crisis?
Thierry Moulonguet: The downturn in the markets was very brutal, with external financing drying up completely and a sharp fall in consumption. In the last quarter of 2008, production at Renault plummeted by 45%. We reacted quickly by putting in place a severe inventory reduction and cost cutting programme.
At the same time, we increased the focus of the business on generating positive free cash flow to reinforce the balance sheet, reduce debt and make the company more resistant to the volatility of the economic climate. Strategic management of the balance sheet will be an essential element corporate control in future!
How is the group doing today?
T. M.: Our efforts have borne fruit, with a return to a positive free cash flow as of 2009. When comparing 2009 to 2007, fixed costs have been reduced by 20%, thanks in particular to a shared effort in terms of payroll costs. In addition, we implemented rigorous working capital management and concentrated our investment on high priority projects. Beyond just improving our figures, this ‘free cash flow philosophy’ ultimately helped create a financial discipline shared throughout the entire business. This cultural change has now become embedded for the future.
The competitive landscape has also shifted significantly…
T. M.: Since 2008, we have seen consolidation in the automotive sector (Fiat-Chrysler, for example) and the rise of new Indian and Chinese manufacturers. This competition is not yet being felt in Europe, but it is already having an influence on emerging markets strongly characterized by rapid growth in this period. More than ever before, the global dimension of the Renault-Nissan Alliance is an advantage in the current environment.
In this context, what are Renault-Nissan’s strategic priorities?
T. M.: There are three primary areas of focus. The first is continuous improvement of competitiveness, by working on different cost elements and a more integrated approach to the supply chain. It’s also an additional incentive to leverage the Alliance with Nissan by taking advantage of all possible synergies while respecting the identity of both companies.
We also intend to reinforce our presence in emerging markets, in particular by relying on the success of our low-cost product range and the assembly operations we are already running in numerous countries: Romania, Morocco, Brazil, Russia, Colombia, South Africa… There are other growth drivers in this area, such as Nissan’s strong presence in China (thanks to the partnership with Dongfeng Motors), Renault’s investment in Russia with Avtovaz, and joint manufacturing operations in India and Morocco.
The third and final area of focus is of course developing new technologies to reduce CO2 emissions. Supported by the Alliance, the electric car project is becoming concrete in the shape of the Nissan Leaf, and in 2011 the first Renault models will be launched, while waiting for Zoe in 2012. Needless to say, we’ll continue to improve our existing engines which will continue to make an essential contribution to the Alliance’s environmental performance.
Which tools are being used to implement the Alliance’s strategy?
T. M.: Firstly, the organisation itself. The Renault-Nissan BV structure has been reinforced by a team of 15 people from both companies to steer joint projects and accelerate their development – from procurement management and production capacity sharing to IT, logistics, and common platforms and drivetrains.
The global cooperative dimension has promoted the rapid development of tools to support remote working – starting with videoconferencing. The reporting tools are also a determining factor for steering our activities. We use a triple approach in this area – by programme, by function and by region – which enables to go beyond the figures and improve our decision making.
How do you see the decade ahead? Will the automotive industry still play a leading role in terms of innovation?
T. M.: The decade ahead will be marked by growth in emerging markets and innovation in the drivetrain, with the coexistence of several clean technologies. These new technologies will be associated with new usage habits, which we’re starting to see appear in cities. Beyond the car itself, there will be growing demand for mobility services and corresponding payment methods.
When looking at the increasing need for mobility in emerging markets and the challenge of environmental constraints, we can see an enormous vista for development and innovation opening up in front of us. Every year auto manufacturers invest billions of euro in R&D, and continue register the largest number of patents. The automotive industry is still pioneering!
Biography
After a career in the ministry of Finance, Thierry Moulonguet joined the Renault group in 1991. He became CFO of Nissan in 2000, and then deputy CEO and CFO of Renault SA in 2004. Since July 2010 he has been director and special advisor to the president of the Renault-Nissan alliance.