Written by | Monchichi
Edit | routing agency
On February 11, 2022, with the official entry into force of the new joint venture contract of BMW Brilliance Automotive Co., Ltd., a joint venture of BMW Brilliance Group in China, the future fate of Brilliance has once again become the focus of attention.
Pursuant to the agreement reached between the parties in October 2018, the BMW Group's stake in BMW Brilliance was changed to 75%, while Brilliance China Automotive Holdings Limited indirectly held the remaining 25%.
The transfer of BMW Brilliance's equity to bmw group also means that brilliance's income from this "profit cow" will be greatly reduced. This has exacerbated the already worrying business situation of the enterprise.
On the one hand, its main business unit, Brilliance Automotive Group Holdings Co., Ltd., has entered bankruptcy reorganization proceedings since November 2020; on the other hand, the company's commercial vehicle joint venture with French automaker Renault Group, Renault Brilliance Jinbei Automobile Co., Ltd. (hereinafter referred to as "Renault Brilliance"), also submitted a bankruptcy reorganization application to the Intermediate People's Court of Shenyang City, Liaoning Province, on December 30 last year. In January, the latter ruled to accept the reorganization application.
Renault Brilliance, an automotive manufacturing company formed by Renault Group and Brilliance China Automotive Holdings Co., Ltd. on a 49:51 share ratio, previously specialized in the production and sales of light commercial vehicles.
From its official establishment in December 2017 to its filing for bankruptcy in December 2021, Renault Brilliance's journey in China's automotive market lasted only four years.
For a car manufacturer, this journey from rise to demise is short.
At the same time, the short-lived joint venture also left a question behind it: What has Renault Brilliance experienced in the past 48 months that has quickly led it to the end of the rout?
The production and marketing business has been losing ground
Renault Brilliance's demise is not without warning.
In May 2021, news spread in the industry about the company's poor operating conditions.
At that time, some media quoted insiders as saying that Renault Brilliance "has stopped a number of important projects in progress, and French experts have also prepared to withdraw one after another", and Renault began to consider "following the passenger car, once again withdrawing from the Chinese commercial vehicle market".
The routing agency also asked Renault Brilliance and Renault China for confirmation of this news. Renault China did not give a positive response, and Zhang Ning, brand director of Renault Brilliance Gold Cup, replied, "Our sales and market share have been rising higher and higher this year, isn't this the best explanation?" ”
At that time, Zhang Ning was referring to the sales performance of the Renault Brilliance Gold Cup from January to April 2021. According to public data, as of April 2021, the cumulative sales volume of the Renault Brilliance Gold Cup in the year was 7529 units, an increase of 188.9% over the same period in 2020, and the market share increased by 2.4%.
This set of data seems to contradict the rumors of "Renault Brilliance's business operation is not effective" that was widely rumored in the outside world at that time. "But this growth is based on the low level of corporate performance under the epidemic in 2020." A former Renault Brilliance executive reminded.
"In fact, the sales of the Golden Cup have been going down since the establishment of Renault Brilliance." "In 2019, we sold 41,000 units, and in 2020 it fell to 23,000 units," the person said. ”
Carlos Ghosn, then Chairman and CEO of Renault Group
Looking back at 2017, Carlos Ghosn, then global president of Renault-Nissan Alliance and chairman and CEO of Renault Group, proposed a goal at the site of Renault Brilliance's inauguration celebration that by 2022, Renault Brilliance's annual sales are expected to reach 150,000 vehicles.
However, after 2018, the sales of Renault Brilliance Gold Cup have experienced three consecutive years of decline. Public data shows that from 2018 to 2020, the annual sales of Renault Brilliance Gold Cup have declined by 30%, 6.5% and 42.8% respectively.
From the second half of 2021, Renault Brilliance Golden Cup stopped publishing sales data, and the news update of its official website also stopped in June last year.
"Judging from the sporadic data obtained, Renault Brilliance has seen a sharp decline in sales since July 2021, with only 17 units sold in the entire month of July, and the sales volume has remained in single digits for several consecutive months since then." Chen Dong, an analyst at Boshi Consulting, said.
In addition, the ambiguity of the statistical caliber often makes the outside world have a wrong perception of the actual sales of the Renault Brilliance Gold Cup. In fact, the small gold cups commonly founded on the road today are produced by Brilliance Xinyuan, a commercial vehicle company founded in 2008 by Chongqing entrepreneur Gong Daxing. In addition, Gong Daxing also founded Siwei Automobile in 2014.
With brilliance's authorization, Xinyuan has obtained the manufacturing qualification of Jinbei Automobile, and its sales volume can usually exceed 100,000 units a year.
"Many people don't know, and think that the sales of the Renault Brilliance Gold Cup are very large, in fact, it is Chongqing Xinyuan's car, just hanging the standard of the Gold Cup, and the exhibition hall is repaired the same as the Renault Brilliance Gold Cup." Sources said.
He also revealed that Renault will even report brilliance Xinyuan's Jinbei sales to Renault Global. "Because Xinyuan uses the Jinbei trademark, it will involve a brand licensing fee." He explained.
Sources said that as early as 2016, the Renault Brilliance project brought a loss of 92 million euros to Renault.
Recently, the French "Echo" reported according to a reference document that Renault Brilliance only produced 42,500 cars in 2018, 37,800 in 2019 and 24,700 in 2020. But in the end, the cost of the project to The Renault Group exceeded 120 million euros.
Lack of funding and the wave of departures
The lack of funds is considered to be a fatal obstacle to Renault Brilliance's development.
According to a person familiar with the matter, who did not want to be named, Renault Brilliance's funding problems have been apparent since 2020. He also told routing that the company "continues to lay off employees on a large scale, while also defaulting on payments to suppliers."
Limited by the shortage of funds, Renault Brilliance's upstream supply chain has frequent problems. Since September 2020, the company has been repeatedly exposed to being "cut off" by suppliers due to arrears of payments, which has affected normal production work.
According to Tianyancha data, Brilliance Renault Jinbei Automobile Co., Ltd. was listed as a "high-risk level" for its involvement in 1990 legal risks. As of February 2022, the company has twice been enforced by the courts for failing to meet its legal obligations on time. In addition, the number of court announcements against the company reached 408. Among them, most of the cases are related to the procurement of parts and components and the purchase of Internet services.
It is puzzling that Renault Group has announced a unilateral injection of 600 million yuan to Renault Brilliance, but the latter's funding gap seems to have reached the point of accumulation, and the 600 million yuan of capital replenishment has not produced the expected effect.
In addition to the huge funding gap that drags down the company's normal automobile production and sales business, the continuous cost contraction has also caused negative effects such as personnel turmoil and a large number of talent losses within Renault Brilliance.
Since the beginning of 2020, Renault Brilliance has made at least two consecutive large-scale layoffs. According to a personnel optimization contract document exposed by the company in July 2020, by the end of April 2021, Renault Brilliance Plans to "optimize" 650 employees, accounting for about 20% of the employees at the Shenyang plant at that time.
Renault Brilliance denied the "layoffs" at the time, but the routing agency learned through contact with former employees of Renault Brilliance that the employees who were "optimized" in the later period were not compensated in accordance with relevant regulations.
"The employees who were laid off in the early stage were compensated, and the cost of the later compensation exceeded expectations," he said, "and the French (foreign executives) are not willing to save their own expenses, so they have not saved much money after such a toss." The person said that French executives rent villas in Shanghai, daily expenses and even fitness costs are paid by the company.
After several rounds of layoffs, there was even a "wave of resignations" within Renault Brilliance - under the influence of pessimistic expectations, the company's internal employees began to shift from "passive departure" to "active departure".
"In the last two years of Renault Brilliance, the internal company was gradually 'purging', firing social recruiters from outside the system, leaving only the original Brilliance Gold Cup people, who are usually some '4050' personnel with poor business level." A source familiar with Renault Brilliance's business told the routing agency, "In this case, people with strong professional ability have chosen to leave, and the company's closure has become inevitable." ”
The person also gave an example that many regional leaders and after-sales service leaders of Renault Brilliance left the company in this situation.
According to the above-mentioned sources, Renault Brilliance's deputy general manager (N1) executives and some foreign employees have begun to consider a retreat as early as April 2021. He said that in this wave of departures, the first round is the intensive resignation of employees, and the next month is the turn of senior officials to resign on a large scale. In June and July 2021, the proportion of Renault Brilliance employees leaving has reached nearly half.
Take, for example, the highest decision-making level of the enterprise. From Thierry Aubry to Guillaume Sicard to Qi Kai, who took office last June, renault Brilliance's POSITION has changed three times in just three years.
More fatally, the company also seems to have underconsidered personnel appointments.
After Shi Gemai took office, Liu Guowei, the former head of marketing and sales of the Renault Department of Dongfeng Renault, was transferred to Renault Brilliance as a senior director of marketing.
Sources said that after Liu Guowei took office, he opposed the opening of new networks or the introduction of new dealers in some regions, making it difficult to carry out business strategies for new brands.
"There are some things that are not good to say, but as far as we know, the internal personnel of the enterprise hold dry shares in some old dealers (former dealers of Brilliance Gold Cup), and Renault will provide subsidies to dealers who meet the sales standards of new cars, and the assessment of sales is carried out by Renault Brilliance's department responsible for market sales." A source who worked at a Renault Brilliance dealer office said.
He also revealed that Renault Brilliance has begun to provide a large number of subsidies to old dealers since the third quarter of 2020, but due to the single commercial play and the low fit with the new brand, it has not brought much improvement in the sales terminal.
Some of the middle-level managers who joined Renault Brilliance from SAIC also left last year. Among them, some people pointed out that at Renault Brilliance, the advanced operating model they learned at SAIC And the experience accumulated over the years are difficult to adopt, and the company seems to be more willing to stick to the previous habits.
Bureaucracy and market miscalculation
At the same time that the business operation is in a dilemma, problems such as renault Brilliance's internal struggles, bureaucracy, and management chaos have gradually surfaced. A former executive of the company told the routing agency that these problems are the crux of the problem that makes it difficult for Renault Brilliance to turn things around.
Francois Provost only visits Shenyang once or twice a year, and Sigomey spends only three or four days a week in Shenyang, staying in Shanghai most of the time. How to manage a good business in this way? He said.
In his previous work, the person has had high-frequency contacts with Chinese and French leaders.
For a long time, Fawland has been senior vice president and chairman of Renault Group China. It was not until October last year that Fawland was transferred back to France as Senior Vice President of International Development and Partnerships for Renault Group.
Foran takes up the position of Senior Vice President of International Development and Partnerships for Renault Group
Prior to joining Renault in 2002, Foran served as Co-Secretary-General for Communication with the French Ministry of Finance and Senior Adviser on Industrial Affairs at the General Secretariat of the French Industrial Restructuring Commission (CIRI) and the French Ministry of Defence.
"Foran actually took a career path in France, and he was not good at managing automobile manufacturing companies." "Sgeumer, on the other hand, previously worked in smaller markets such as the southeastern region of France, Turkey and India, and was unfamiliar with mega-auto markets like China," the source said. ”
Schger stepped forward as Head of Marketing and Managing Director of Renault UK
The person believes that the Renault Group largely represents the official will of France, and the degree of commercialization is relatively limited. Currently, the French government holds a 15 percent stake in Renault, two seats on the board of directors, and is the largest shareholder in France's second-largest automaker.
In this context, Renault's strategy in China has been misjudged many times, and many legacy problems such as Sanjiang Renault and Dongfeng Renault have been left behind.
For Renault Brilliance, the situation is similar. The alienation and separation of corporate executives from actual business and business laws, coupled with serious bureaucracy, has led to the company's repeated missed opportunities for self-help.
In the 2020 global outbreak of the new crown pneumonia epidemic, Renault Brilliance had planned to modify the ambulance for export after resuming production, but this plan was rejected by executives and finally abandoned.
"If Renault Brilliance modifies an ambulance, the price is more advantageous than the French Renault model, and we export only more than 100,000 yuan, and Renault exports 278,000." The source said, "Originally through this opportunity to export thousands of cars to Africa, Southeast Asia or South America, it can also defuse the pressure of enterprises to a certain extent." ”
In the view of the above-mentioned people, the development of Renault Brilliance has always faced double difficulties - on the one hand, Brilliance is "lazy", hoping to emulate the BMW Brilliance model and entrust enterprise management to foreign parties; on the other hand, the French side does not fully understand the Chinese market and always manages enterprises in China "with French ideas".
The source gave an example to the routing agency. In 2020, the team's proposal to participate in the Guangzhou Auto Show was rejected by the French management, which said it would participate in a dedicated commercial vehicle show.
"In China, the commercial vehicle exhibition is not a scale, and its communication effect is certainly not as good as participating in the passenger car exhibition," he explained, "and the exhibition fee at that time was only 3 million yuan, and the French side insisted on using this money to subsidize dealers, and as a result, dealers still walked and scattered after digesting this subsidy." ”
Within the Renault Group, there is a saying: "If the logic is correct, you can build a building on eggs". However, in the operation process of Renault Brilliance, the logic of the French side seems to be constantly deviating from the actual situation of the market.
"Several models of the Jinbei are already very old, and the French side also requires a price increase, and if the price cannot be increased, it will be reduced." A source who was in charge of the product at Renault Brilliance said.
The person believes that the European wide-body light passengers, including Iveco, Chase V80, and Tuyano, have fallen to the range of less than 100,000 yuan in terms of price, and Jinbei, as an essential Japanese narrow-body light passenger, its market size itself is shrinking, and there is no premium space.
According to the planning of Renault Brilliance at the beginning of its establishment, the company will produce and sell light commercial vehicles based on the three brands of Jinbei, Renault and Huasong, and the planned products involve MPV, medium-sized vans and trucks, large vans and trucks.
However, in the actual operation since then, Renault Brilliance has not launched Models of Renault and Huasong brands, and only launched a few products using the Jinbei brand.
In fact, after the establishment of Renault Brilliance, the number of old products was drastically reduced, but the introduction of new products was very slow, and eventually the number of models available for sale was reduced from 10 to 5 models - at least only 3 models were on sale.
A number of Renault Brilliance dealers said that from the second half of 2020, its operations fell into a state of loss. At that time, among the about 140 dealers in Renault Brilliance, only about 30 sold more than 20 units per month.
Some dealers, in desperation, began to quietly sell other brands of models in the outlets, while others who could not persist simply chose to withdraw from the network.
"In France, Renault's brand history is very long, and many dealers have grown up with the brand after decades, and a deep relationship has been established between the two. In China, Renault Brilliance was founded only 4 years ago, and dealers can only think from the perspective of revenue. Analyst Chen Dong said.
He believes that most of Renault Brilliance's management has no experience in the commercial vehicle market, but simply measures the problem from the perspective of bicycle profit or market size. The sudden reduction of models in a short period of time will overwhelm dealers.
Former Renault Brilliance executives told routing agencies that the slow pace of product introduction is a long-standing problem for the company.
"The products previously promised by the French side could not be taken in after 4 years, and the company's internal product planning adjustments were too frequent, resulting in a large waste of funds and time." He said.
Renault Brilliance employees are also quite critical of this. They said, "Brilliance Xinyuan development of a model as long as 178 million yuan to complete, Brilliance Renault has not developed a new product with 70 million to 80 million."
"Xinyuan now has new energy vehicles, and can also sell carbon credits, the French can't do anything for half a day, and it is not as good as a private enterprise." A former Renault Brilliance employee sighed.
Write at the end:
Under the intertwining of the above multiple factors, the bankruptcy of Renault Brilliance is like a rout that has been written as early as 4 years ago. At the same time, it has also made Renault's career footprint in China more and more shallow.
As a result of this change, the group's strategic balance in China, "light commercial vehicles and electric vehicles", has undoubtedly been undermined. In the current Chinese market, Renault Group can only continue to explore in the field of electric vehicles through two joint ventures, EasyJet New Energy Automobile Co., Ltd. and Jiangling Group New Energy Automobile Co., Ltd.
This makes people wonder: Does Renault have a future in China?
From Renault's perspective, "absent from the world's largest automotive market" is clearly not an option to discuss. Its CEO, Luca de Mayo, has expressed on more than one occasion the hope of "returning to the Chinese market." But the outside world also saw that this expectation on the Part of Renault was conditional on it – the group said that the return of the Chinese market would not be realized "in the traditional way".
In January, the new cooperation agreement signed between Renault and Geely Holding Group may add a footnote to Luca de Mayo's ambitions. Under the deal, the French automaker will work with its Chinese partners to launch Renault models powered by Geely's hybrid system — only this time they'll target south Korea.
Alpine, a high-performance sub-brand owned by Renault
In addition, Luca de Mayo has repeatedly revealed the idea of introducing Alpine, a high-performance sub-brand of renault Group, to China.
However, no matter how the business form changes, if Renault's basic understanding of the Chinese market and the front-line managers' business behavior do not undergo a profound change, then the pace of the company's progress may still be difficult to stabilize.
Of course, more importantly, being erased from the list of mainstream brands by the Chinese market may have become the fate of Renault that is difficult to reverse.
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