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    Interview with Bruno Ancelin on AVTOVAZ status

    Togliatti, Russia, June 27, 2013 – When the joint-venture agreement was signed in December 2012, we spoke with Bruno Ancelin, Chairman of the Eurasia Region, about Renault’s investment in AVTOVAZ, and he explained to us how the deal would benefit Renault. Six months later, we talked with him again to find out what progress had been made.

    Interview with Bruno Ancelin on AVTOVAZ status

    The General Meeting recently appointed Carlos Ghosn Chairman of the AVTOVAZ Board of Directors (Read the in-house news bulletin). How are the roles going to be divided up now? Can you tell us who the members of the AVTOVAZ Executive Committee will be?

    Bruno Ancelin: The AVTOVAZ board will be increased from 12 to 15 members. The Renault-Nissan Alliance will now account for eight of the 15 members. Carlos Ghosn has been elected Chairman of the Board, replacing Sergueï Chemezov, who will henceforth alternate with Carlos Ghosn as Vice Chairman.
    The Board’s membership reflects the size of each shareholder’s stake: Renault 37%, Nissan 13%, the Russian state represented by Russian Technologies 25%, and private investors 25%. Carlos Ghosn and Igor Komarov will represent the Alliance, Carlos Tavares, Dominique Thormann, Serge Yoccoz and I will represent Renault, and Joseph Peter and Vincent Cobee will represent Nissan.
    Igor Komarov remains CEO of AVTOVAZ. He was appointed by the Alliance. He will continue to head the AVTOVAZ Executive Committee, whose members will stay the same.

    Interview with Bruno Ancelin on AVTOVAZ status

    How did AVTOVAZ’s employees react to this news?

    B.A – The Alliance’s larger stake in AVTOVAZ is creating a lot of expectations among the personnel, in particular concerning the modernization of the company, changes in management methods, and improvement of quality. The crucial area where progress is needed is training. But it is undeniable that it has also created concerns – in particular about employment, AVTOVAZ’s independence, and the Lada brand’s future – and we need to offer reassurance about these things.

    Interview with Bruno Ancelin on AVTOVAZ status

    Can you give us a rundown of initial progress in the projects?

    B.A – The first major project was the installation of the B0 production line. Five models of the three brands – Renault, Nissan and Lada – will be manufactured on it in 2014. Four of the five vehicles are already coming off the line: production of two Ladas has already started (PV and LCV versions of the Lada Largus), the Nissan Almera is in the ramp-up phase, and the first of the two Renault models is in the industrial prototype phase. The B0 line’s manufacturing capacity will be 350,000 vehicles a year.

    Interview with Bruno Ancelin on AVTOVAZ status

    As for the mechanical components, at this very moment we are starting production of the Renault K4 engine as well as the J gearbox, both of which will be used by the three brands. Since September 2012, AVTOVAZ has been manufacturing all chassis parts for the B0 platform vehicles for Renault’s Moscow and Togliatti plants, and, soon, the Izhevsk plant.

    Interview with Bruno Ancelin on AVTOVAZ status

    With the improvements to the industrial complex at Togliatti and those planned at the other sites, the Renault-Nissan Alliance and AVTOVAZ will have annual production capacity in Russia of 1.7 million cars starting in 2016: 1,050,000 at Togliatti, 350,000 at Izhevsk, 180,000 at Moscow, and 120,000 at Saint Petersburg.

    Isn’t one of the objectives of this partnership to achieve a combined 40% market share for Renault, Nissan and AVTOVAZ, including 8% for Renault, at end-2016?

    B.A – Renault cars have a reputation in Russia for quality, roominess and comfort, and that has a positive impact on our sales. At the end of 2012, we had a 6.5% market share, and at the end of May, 7.9%. The current figure is probably artificially inflated, since we are continuing to deliver an impressive backlog of orders. The market has been declining, though: it has fallen 3% since the beginning of the year and fell 12% in May. Nevertheless, Russia is now Renault’s second-largest market, just behind France. And in Russia, Renault is the number-two brand after Lada. An outstanding performance! Our ambition is to get close to 9% in 2016, hold on to our ranking as the number-two brand, and thus make our contribution to the Alliance’s 40% market share.

    What do you see as the difficulties to be overcome at AVTOVAZ today?

    B.A – The biggest difficulty is still ensuring consistent quality. The way to overcome this problem is training. I am confident, but this will take time. A thousand employees have already been trained at Renault and Nissan, at the Technical Center, and at Alliance plants in many countries around the world. Rapid improvement in communication between supervisors, managers and operators and, more generally, in coaching at the local level, are also necessary.

    In your experience, how do international teams work together in an operational setting?

    B.A – In Russia, to make any progress you have to know how to deal with other people. It’s cultural. This in no way prevents good work relations or strong, lasting friendships outside of work. It’s the way things are, and the teams have gradually come to terms with these particular aspects of the culture in order to get on with the job. For the system to function, it is also necessary to use and respect the bureaucracy, but while trying to progressively scale it back. Our people are working well in these contradictory and sometimes hard-to-fathom situations by developing solid and enduring personal relations with the Russian teams.

    What will you be working on together next?

    B.A – The next stages are very important. First, we have to do everything possible to see that production of the two Renault vehicles goes smoothly and according to schedule. Then we have to locally source the H4 engine that will be mounted on the Alliance models at AVTOVAZ toward 2015, with three successive batches of 150,000 engines a year. But our prime objective for the coming three years is to give Lada a makeover with a new, more up-to-date range. Some of these vehicles will share a platform with Renault and Nissan, and some will have a new platform designed by AVTOVAZ, which will include a lot of Renault modules. Their design will be new and very modern, their quality at the Alliance level, and their engines and gearboxes updated to succeed in the Russian market.

    Interview with Bruno Ancelin on AVTOVAZ status

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