Renault and Nissan plan £600m sales shake-up

Renault and Nissan yesterday unveiled a £600m restructuring of their European sales operations which will result in 500 net job losses and a massive consolidation of their UK dealership networks.

The brunt of the cutbacks will be borne by Nissan, which is shedding more than 800 back office jobs, while Renault will take on 340 extra staff. The £600m (1bn euros) in savings are part of the 3bn euros target set last year when the two car makers forged their global alliance with Renault taking a controlling 37.5 per cent stake in Nissan.

The aim of the restructuring is to increase the two car makers' combined share of the European market to 17 per cent by 2005 compared with 14 per cent last year, when they sold 2.4 million cars and light commercial vehicles. Under the plan Nissan and Renault's 5,100 European dealerships will be owned by a network of up to 800 "hubs".

In the UK, this will result, in Nissan and Renault cars being sold through 70-100 hubs compared with 260 dealerships at present. However, the number of actual dealer outlets will remain constant at around 570.

Renault and Nissan are also planning to badge one another's models, starting with 4x4 vehicles and vans. Nissan-made Xterra and Terrano off-road models are likely to be badged as Renaults while Nissan-badged versions will appear of Renault's Traffic, Master and Kangoo vans.

Of the 1bn euros in cost savings, 230m will come from the new hub system, 400m from increased sales and 370m from lower operating costs. Senior executives from the two companies stressed, however, that the Nissan and Renault brands would continue to be separately marketed and sold. In the UK, for instance, brand management will remain separate.

Renault and Nissan would not be drawn on whether they will respond to the price war begun by Rover, which is cutting its prices by 12 per cent following the sale of the business to the Phoenix consortium.

A decision on where Renault and Nissan will build their new small car - the fist model to be developed jointly by the alliance - will be taken at the end of this year. Nissan has warned that its Sunderland plant will have to cut costs by 30 per cent if it is to be chosen as the site for the new car, which will be based on a common platform and will replace the Nissan Micra and the Renault Clio from 2003.

Norio Matsumara, the executive vice-president of Nissan Motor Co, said discussions were still going on about whether to build the car in the UK or on the Continent.

He said that although productivity at Sunderland was the best in the world, the strong pound was causing a "particular problem". More than 75 per cent of Sunderland's output of 330,000 cars a year is exported.