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New 2009 Renault Megane - (Global) - Continued......

September 10th, 2008
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CHAPTER 4
New Renault Mégane: a family with character
New Renault Mégane is a car which exudes a real personality suited to all motorists.

Mégane: a large family that has forged a lasting name for itself
With total worldwide sales of almost 8.5 million units since its launch in 1995, Mégane has become a phenomenal success story. The seven body types that make up the Mégane family and which transport millions of motorists and passengers every day are manufactured on three continents (Europe, South America and Asia) in nine factories, and sold in more than 75 countries outside of Western Europe.

In Western Europe, Mégane has earned the confidence of a discerning customer base thanks to the ideal balance it strikes between travelling comfort, best level safety, everyday user-friendliness and low running costs. The various Mégane models have long figured at the top of the European sales charts and have received numerous leading awards, including Car of the Year titles for Scénic I in 1998 and for Mégane II in 2003. Mégane was also the first compact segment car to achieve a five-star Euro NCAP rating.

A diverse and highly innovative range
As the first MPV of its class, Scénic created the compact MPV segment, continuing the philosophy pioneered by Renault with the launch of Espace in 1984 and then Twingo in 1993. The Scénic revolution sparked off a chain reaction within the industry, drawing a large number of carmakers in its wake.

Contuining the path of innovation, Mégane Coupé-Cabriolet was the first car to feature a folding glass sunroof as standard. It also marked a first in its category by delivering the same standard of safety performance as a saloon, thanks notably to the protection it affords for anti-submarining.

In 2004 and 2005, the addition of two newcomers to the Scénic line-up saw Renault become the first manufacturer to market two body types and three distinct versions of its compact MPV, namely Scénic, five-seat Grand Scénic and seven-seat Grand Scénic.

In 2004 and 2005, Renault Mégane emerged as Western Europe's top selling model, all body types included. And as production has expanded to factories in South America, Turkey and Iran, so its popularity on other continents has grown, too.

In 2007, 13 years after the launch of the original model, the Renault Mégane family figured amongst Western Europe's top-five best-selling passenger cars with a segment share of almost 10 per cent.

The compact segment in Western Europe: a market of more than five million cars

With almost 5.2 million cars registered in 2007 in Western Europe, the medium-sized family car segment accounts for more than one-third of the European market and continues to stand out as Western Europe's biggest segment in volume terms.

Following the MPV revolution during the early part of this decade, the segment saw a huge influx of compact SUV whose sales increased seven-fold over a period of 10 years. The C-segment increased by 1.4 per cent in 2007 over 2006.

Today’s sector is ultra-competitive, with more than 100 models available in Europe, produced by brands ranging from the world's major carmakers to European specialists. The offer is extremely varied, too, and includes no fewer than nine distinct body-types: three- and five-door hatchbacks, coupés, saloons, estates, coupé-cabriolets, short and long MPVs, pluls SUVs.

Hatchbacks and saloons continued to account for more than half of all vehicle sales in 2007, and remain the traditional C-segment body-type. They have finally succeeded in resisting the shift away from this type of car noted ten years ago and sales volumes have now stabilised.

The second most frequent body-type is the MPV. More than 30 per cent of the segment's buyers choose this type of car. In Western Europe, MPV sales volumes are growing slowly but surely, with growth of 1.4 per cent in 2007 over 2006.

Compact SUV have met with considerable success in Western Europe over the past five years, with growth of almost 4 per cent in their segment share and the availability of some 25 different models.

The statistics point to stability within the segment, notably because of legislation aimed at curbing polluting emissions. Compact models stand out as the best qualified cars in this domain thanks to the balance they strike between driving pleasure, cabin space and CO2 emissions.

The proportion of diesel models has also been increasing consistently in Western Europe and they accounted for 60 per cent of the segment in 2007 (compared with 25 per cent in 1995). This growth is buoyed by the performance of diesel engines in terms of CO2 emissions. Diesel cars benefit from favourable fiscal measures across most of the Western European market where diesel-powered versions represent almost 70 per cent of Mégane II sales.

Ensuring a sustainable profit context
The capital outlay for New Mégane amounted to €1.8 billion, a figure which covered the design of six new body-types and their production in Palencia (Spain) and Douai (France).

Despite the exacting brief, research and development costs were kept to a minimum thanks to the carry over of certain technologies developed for New Laguna.

Like New Laguna, New Mégane has benefited from the Quality Excellence Plan and has capitalised on the progress made following the application of Renault best practices and procedures, as laid out notably in the Renault Design Way (SCR) and Renault Production Way (SPR). This uncompromising cross-functional approach has been profitable to the entire range.

The significant carry over of components from New Laguna and other Renault models, as well as from the production set-up deployed for Mégane II has resulted in a sharp fall in production-related investment which is 30 per cent less than that required for the previous generation car.

The introduction of the second-generation Mégane family led to significant investment in the factories which have consequently already been extensively modernized, with new bodyshops in particular. The substructure of New Mégane is identical to that of Mégane II which was already of a high standard. The carry-over from Mégane II – which not only concerns platform components, but also the principal mechanical assemblies, parts and technical solutions – proved particularly valuable in curbing production-related investment and ultimately produced few constraints since it gave a free hand to the creativity of the design team.

A rationalised production plan has been put into place to optimise manufacturing capacity. The programme's profitability is to a great extent ensured by amortisation of the cost of using existing production facilities. To favour optimal use of the capacity of its European production plants (Palencia and Douai), Renault has divided the production of the six models of the New Mégane family amongst these two sites, with New Mégane hatchback produced in Spain. This reorganisation, with the different factories specialising in specific body-types, has enabled cost savings to be achieved in the production of the platform which has now been amortized. It has also made it possible to optimise the way by which the investment for the production of each body-type is targeted.

The €810 million production-related investment was divided as follows: €370 million invested with suppliers and €440 million in the factories, chiefly Douai and Palencia.

Work with suppliers on optimising capacity dimensioning and the suppression of doubling up of tooling achieved a saving of €125 million. The sourcing of certain mass-produced parts in Eastern Europe and Asia has resulted in lower component purchasing costs. Quality control procedures are enforced just as strictly as they are in the case of traditional supply chains and the results achieved are the same: just 30 defective parts per million.

Factory-related investment has been halved compared with Mégane II and was split relatively evenly between the two plants, with €250 million going to Douai and €190 million to Palencia.

The purchase of tooling for the production of the new components and of new stamping shop robots represented a total of €180 million across the three plants in question, namely Palencia and Valladolid (which ensures 60 per cent of stamping operations for the three body-types) in Spain, and Douai in France.

The 95 per cent-automated bodyshops were modified at a cost of €215 million, with almost half that of sum going to Palencia. The purchase of some 100 robots has produced gains in both quality and durability over the previous generation Mégane. This tooling concludes the fitting out of the bodyshops which were set up five years ago and which figure amongst the world's very best.

The highly robotised paintshops have benefited from an investment of €7 million with a view to adapting existing equipment. Palencia's paintshop was extensively updated in 2002.

An investment of €32 million has gone into the assembly lines. This has essentially been spent on adapting existing facilities to the models that make up the New Mégane family. It also served to improve working conditions in Palencia with the introduction of variable-height skids which are more ergonomically efficient. The introduction of strip and build procedures as used by Nissan during the start-up phase enabled operators to maintain a high level of precision when working on early runs of new models. A car is set aside to be repeatedly built and stripped, enabling operators to keep their eye in at start-up production levels.

Start-up costs amounted to €67 million, an improvement made possible through the harmonisation of procedures and methodologies from one factory to another. The experience of previous production start-ups, such as those of New Twingo (Novo Mesto) in Slovenia, and of New Laguna (Sandouville) and New Kangoo (MCA Maubeuge) in France, made it possible to capitalise on the best practices and ensure a swift, controlled start-up of New Mégane's assembly lines.

Profitable investment
The production of the different New Mégane body-types is programmed over a short period of time and Renault is poised to renew its line-up in the segment in Western Europe in the space of less than two years.

Full UK pricing, specification and technical details will be available closer to the launch of the five-door Hatch in November 2008.

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