“When everything goes wrong, things can’t get worse,” joked Renault South Africa MD, Xavier Gobille, at this year’s CAR Conference at the Johannesburg International Motor Show. The Frenchman was addressing delegates on the immense challenges that Renault South Africa faced when he took over the reins in 2007. “Renault was in very bad shape in South Africa,” Gobille said. The company had poor service back-up and low resale values, which contributed to a downslide in sales performance. The business was running at a loss and had immense stock reserves with no clear way of fixing things. “I was captain of a ship that was sinking in the dock,” added Gobille, “and that wasn’t good.”
“We needed a plan,” said Gobille. “We needed direction and a clear vision. On the one hand, we needed to improve quality – not only of our products, but also our back-up service and business processes. We also needed to improve our efficiency to become profitable. In short, we needed to fix the past, manage the present and prepare for the future.”
Hard work, determination, and effective leadership managed to turn things around. In a few short years, Renault has gone from a struggling importer of French vehicles on the verge of folding, to a local manufacturer with a revitalised brand image. At the conference, Gobille shared his experiences at the helm of this shift and imparted one or two lessons that he learned along the way.
“I knew that if we were to recover, we couldn’t shy away from our problems. We needed to be honest about the challenges we faced, before we could fix any of these. Transparency remains a key value, both within our company but also with our customers. We needed to align our strategy with our stakeholders and our aim was to become a South African company,” said Gobille.
A R1-billion investment by the Renault-Nissan alliance for the manufacture of the high-volume, entry-level Sandero in Gauteng illustrated the company’s commitment to the local industry. Today, more than 60 per cent of Renault’s local sales are locally made. This was a brave step, because the decision was made in the middle of a very bad period – for the company and for the industry.
Renault has always had a large fan base in this country – arguably the most active, given the volume of correspondence, good and bad, we receive from owners. And, as CAR noted in 2010 when we named Renault our Motor Company of the Year for revitalising its market image and starting to rectify its shortfalls, “Renault is nothing if not resilient, and both marque loyalists and potential customers were encouraged when, in 2007, a Confiance programme – later dubbed “110 %” – was instituted to rebuild confidence in the company and its products. And it is working. Recent independent quality surveys have shown that product, sales and service have all been steadily improving.” This trend continues today.
Locally, 20 new models were introduced since 2008, a new-product offensive which has not been attempted by Renault anywhere else in the world. The results have been positive, as the company outperformed the market in 2009 and 2010.
Behind the scenes, the company also embarked on a comprehensive efficiency drive. “We did not only focus on cost-cutting,” said Gobille, “as we believe that cost-cutting could very easily be recklessly. We reviewed all processes within the company and cut our operational expenses by 40 per cent over two years. We looked to create value with every activity and tried to find possible spin-off activities to maximise our people and capital investments.”
According to Gobille, the key value drivers behind these initiatives were extensive communication, in order to allow every employee to add value, instil commitment and to leverage the values of the Renault brand. In short, what the brand needed was passion.
Gobille summarised the lessons that he learned during Renault’s turnaround as follows:
1. Diagnose the situation: Gobille required every department to complete a SWOT (strength, weakness, opportunity and threat) analysis, which enabled the company to see the complete picture of each department. He also instated a 3×3 analysis, which saw each employee answering three questions: a.) Name three things that you are scared of; b.) Name three things that you are unhappy with; and c.) Name three things that you will do first when you are MD of the company.
2. Improve efficiency and eliminate waste: This is, according to Gobille, a permanent challenge, which requires a company to allow people to be brave enough to fail. Gobille attempted to turn Renault into a learning organisation that not only encouraged people to copy with pride, but to try new things and to not be scared of failing.
3. Unleash potential: The company realised that it needed to build team spirit, give recognition where it is due and to improve on internal communication in order to foster this environment. We needed to utilise the potential of our people.
4. Define your brand and elaborate on strengths and eliminate weaknesses.
5. Align your strategy throughout the organisation.
