Driving safety forward

Renault in 2003 Annual Report Key fi gures and highlights of 2003

Renault market share (%) 1999 2000 2001 2002 2003 Western Europe Passenger cars 11.0 10.6 10.6 10.7 10.6 Light commercial vehicles 13.9 14.1 15.3 15.9 15.1 Passenger cars and light commercial vehicles 11.3 11.0 11.2 11.3 11.1 Central Europe (1) (passenger cars and light commercial vehicles) 6.3 7.0 9.9 10.7 10.6 Worldwide (passenger cars and light commercial vehicles) 4.2 4.2 4.3 4.2 4.1 (1) Not including Dacia brand sales.

Renault group sales worldwide (units) 1999 2000 2001 2002 2003 Western Europe 1,948,449 1,873,865 1,905,308 1,870,344 1,806,443 Rest of the world 339,827 481,706 507,415 534,633 582,515 Total worldwide 2,288,276 2,355,571 2,412,723 2 404,977 2,388,958 of which, light commercial vehicles 301,306 335,669 338,148 340,656 331,620 of which, passenger cars 1,986,970 2,019,902 2,074,575 2,064,321 2,057,338

Group revenues (€ million) Operating margin Foreign revenues and domestic revenues (%) (€ million)

40,175 2,500 40,000 37,592 36,351 36,336 37,525 2,205 2,000 2,022 30,000 1,500 1,483 1,402 20,000 63.5 64.5 60.8 61.7 64.5 1,000 10,000 Foreign revenues 500 473

0 36.5 35.5 39.2 38.3 35.5 Domestic revenues 0 1999 2000 2001 2002 2003 1999 2000 2001 2002 2003

Renault net income Employees (€ million) (units)

2,500 2,480 200,000 166,114 1,956 159,608 2,000 150,000 140,417 132,351 130,740 1,500 100,000 1,080 1,051 1,000 50,000 500 534

0 0 1999 2000 2001 2002 2003 1999 2000 2001 2002 2003

Renault share performance from January 1, 1997 — December 31, 2003 CAC 40 indexed on Renault share price at January 1, 1997:

60 nault 50 are price 40 30 C 40 index 20 10

1997 1998 1999 2000 2001 2002 2003

Renault in 2003 Renault pursues a strategy of profi table growth with two prime goals: selling four million vehicles worldwide by 2010 and building a global automobile group with Mégane Nissan. In moving towards these goals, Renault has set The Mégane project has been a landmark event, putting a complete new range with seven different body styles fi ve priorities. These are to: on the market in under two years. And in 2003, Mégane II was Europe’s top-selling model. ■ Build recognition for Renault’s brand identity ■ Be the most competitive manufacturer on our markets in terms of quality, costs and delivery times ■ Extend our international reach Euro NCAP ■ Develop Renault’s core values Renault is the only manufacturer with five models awarded ■ the top five-star rating in Euro NCAP crash tests—Espace IV, Translate success into fi nancial performance. Vel Satis, Laguna II, Mégane II and Scénic II. Safety is an absolute priority for all Renault vehicles. Considering their central place, these fi ve priorities have been chosen to structure the presentation of our achievements this year.

Formula 1 In 2003, Renault scored 88 points, taking five podium places including one Grand Prix victory to rank fourth in the construc- tors’ championship. Contents

From the Chairman 2 Dacia Board of Directors and management team 4 Dacia and Renault Samsung Motors play a key role in the Commitment to good corporate governance 8 Renault group’s drive for international expansion. In 2003, Dacia topped up its range with the Solenza, and in 2004 will be rolling 1. The Renault Brand— out a new model especially designed for emerging markets. winning recognition for a strong identity 10 2. Competitiveness: aiming to be one of the best 24 3. Building a global group 32 4. Values underpinning growth 42 5. Building for proven success 54 Results 56 Looking ahead 58 International horizons Renault’s expansion outside Western Europe gathered pace in 2003, with major agreements for production in Russia, Iran and Morocco helping to achieve the goal of selling four million cars a year by 2010.

Concept car Innovation has always been part and parcel of Renault’s identity—illustrated by the Be Bop concept cars ushering in the future at the Frankfurt motor show in 2003.

Renault in 2003 From the Chairman

At Renault, 2003 will be remembered for the successful launch of the Mégane II lineup—seven new models put on the market in the short space of 17 months between October 2002 and March 2004.

This complex, far-reaching project has yielded the rewards we hoped for in terms of sales and fi nancial results. Brought to market on time, on budget and in line with our goals for quality, Mégane II has moved straight to the top as Europe’s best-selling range in any category. Together with other successes such as the Espace IV and Clio, it enabled Renault to retain its place as Europe’s number-one brand for the sixth year in a row. It thus marks an important stage in the renewal of our product line, which will continue in 2004 and beyond, consolidating Renault’s image as an innovator and our brand’s reputation for excellence in safety.

Faced with the slack market growth affecting all manufacturers in Western Europe, Renault continued its international expansion in 2003, despite the persistent economic slump in Mercosur countries. Our sales were on a particularly fi rm track in Central and Eastern Europe, in Turkey, Russia, Mexico and Colombia. A number of agreements fi nalized during the year open promising prospects for major new development on international markets, particularly in Iran.

Turning to fi nancial results, market successes and effective cost control enabled us to post one of the best performances of any European volume manufacturer in terms of operating margin. Earnings also benefi ted from the contributions of our strategic interests in Nissan and AB Volvo.

The Renault-Nissan Alliance will be celebrating its fi fth anniversary in 2004, which will be an occasion to reaffi rm its goals. By systematically making the most of scope for synergies between two highly complementary companies, we are able to move ahead more quickly and consolidate our capacity to cut costs. This unique partnership already ensures a leading place for the Renault-Nissan group in the worldwide automobile industry.

Renault’s results in Formula 1 racing are an excellent illustration of the will to win shared by all the men and women in our group. Just as clearly, they bear witness to talent, hard work, competence and dedication—qualities that mean so much in our shared efforts to build for the future. And I would like to thank all Renault staff members for those efforts.

Renault, together with its associated brands Dacia and Renault Samsung Motors, will be pursuing its strategy for profi table growth in the year ahead. In this, innovative new products and continuing progress to ensure constant improvement in quality, quicker responses and more effective cost control will naturally be fundamental priorities, as will consolidation of interna- tional expansion and affi rmation of our core values, particularly as regards safety. By the same token, we will be doing all we can to optimize operating results.

2 Renault in 2003 Louis Schweitzer Chairman and C.E.O.

Renault in 2003 3 Board of Directors (on December 31, 2003)

Louis Schweitzer Pierre Alanche Yves Audvard

Chairman Engineer in charge of overseeing development Renault Advanced Engineering Process Engineer of Renault’s production information systems

Michel Barbier Jean-Louis Girodolle Alain Champigneux

Renault Working Conditions Technician Inspector of Finance and Deputy Director, Renault Engineering Project Manager Treasury Department, Ministry of the Economy, Finance and Industry

François de Combret Carlos Ghosn Itaru Koeda

Associate Director, Lazard Frères President and Chief Executive Offi cer, Co-Chairman of the Board of Directors and Nissan Motor Co., Ltd. Executive Vice President, Nissan Motor Co., Ltd.

4 Renault in 2003 Marc Ladreit de Lacharrière Dominique de La Garanderie Bernard Larrouturou

Chairman and Chief Executive Offi cer, FIMALAC Attorney, Former Leader of the Bar Managing Director, (Ordre des Avocats de Paris) CNRS (National Center for Scientifi c Research)

Henri Martre Jean-Claude Paye Franck Riboud

Honorary Chairman, Aérospatiale Attorney Chairman and Chief Executive Offi cer, Danone Group

Robert Studer Jeanne Seyvet

Former Board Chairman, Director General, Industry, Information Union de Banques Suisses Technologies and Post, Ministry of the Economy, Finance and Industry Term ended in 2003

Renault in 2003 5 Team

Group Executive Committee (on December 31, 2003)

Louis Schweitzer Pierre-Alain De Smedt Georges Douin Chairman and Chief Executive Offi cer, Executive Vice President, 59 years old Executive Vice President, 58 years old 61 years old

Ecole Nationale d’Administration. A graduate in engineering and business Ecole Polytechnique. Inspector of Finance. administration from the University of Joined Renault in 1967 as a quality Joined Renault in 1986. Became Chief Brussels. After three years as Chairman engineer in the R&D Department. Financial Officer and Head of Strategic of SEAT, he joined Renault in 1999 as Became Head of Engineering in 1988, Planning in 1988, then Executive Vice Executive Vice President. Reporting then Vice President, Technology in President in 1989. Appointed President to him are Research, Vehicle and 1989, before being appointed Senior and Chief Operating Officer in December Powertrain Engineering, Passenger Car Vice President Product and Strategic 1990. Chairman and C.E.O. of the Projects, Purchasing, Manufacturing, Planning and Projects in 1992. Senior Renault group since May 1992. and the Mercosur Division. Vice President, Product and Strategic Planning and International Operations since 1997. Appointed Executive Vice President in 1998.

Group Executive Committee and Renault Management Committee (on December 31, 2003)

Louis Schweitzer (1) Jean-Pierre Corniou Georges Douin (1) Chairman and Chief Executive Offi cer Senior Vice President, Chief Information Offi cer Executive Vice President, Product & Strategic Planning and International Operations Patrick Bessy Alain Dassas Senior Vice President, Corporate Communications Senior Vice President, Finance Jean-Baptiste Duzan Senior Vice President, Corporate Controller Patrick Blain Pierre-Alain De Smedt (1) Senior Vice President, Market Area Europe Executive Vice President, Michel Faivre-Duboz Industry and Technology Senior Vice President, Vehicle Engineering Marie-Christine Caubet Development Senior Vice President, Market Area France Remi Deconinck Senior Vice President, Product Planning Patrick Faure (1) Jacques Chauvet Executive Vice President, Corporate Senior Vice President, Parts & Accessories Odile Desforges Communications, Chairman and C.E.O., Renault (since January 1, 2004) Senior Vice President, Purchasing. Chairman and F1 Team Managing Director, Renault Nissan Purchasing Organization (RNPO)

6 Renault in 2003 Patrick Faure François Hinfray Thierry Moulonguet Michel de Virville Executive Vice President Executive Vice President, 49 years old Executive Vice President, Chief Financial Officer Corporate Secretary General Chairman and C.E.O. of Renault F1 Team, 53 years old Executive Vice President, Renault Group Human 57 years old (Since January 1, 2004) Resources, 58 years old

Ecole Nationale d’Administration. Ecole Nationale d’Administration. École Nationale d’Administration. PhD in mathematics. Research engineer Joined Renault in 1979, Head of Sales Joined Renault in 1989 as Director in Joined Renault in February 1991, as at the CNRS (National Center for and Marketing from 1991 to 1998. He charge of European Affairs. He was Head of Group Financial Relations, Scientifi c Research). Ministry of Labor was appointed Chairman and C.E.O. appointed Director of the Rouen Branch before being appointed Vice President, (1986). Advisor at the Auditor-General’s of Renault V.I. and then Renault V.I./ Offi ce in 1991, then Managing Director Capital Expenditures Controller in 1996. Department. Joined Renault in 1993. Mack until 2000 when he was named of Deutsche Renault in 1993. In 1997 he In 1999, following the signing of the Became Head of the Human Resources Executive Vice President of the Renault became Senior Vice President, Market Renault-Nissan Alliance agreement, Department in 1996, and was appointed group. Chairman of Renault Sport from Area France, before becoming Executive joined Nissan Motor in Japan as Corporate Secretary General in 1998, 1986, he became Chairman and C.E.O. Vice President, Sales and Marketing Deputy Chief Financial Offi cer. In 2000, with responsibility for the group’s of Renault F1 Team in 2002. in 1998. He is also responsible for the was appointed Chief Financial Offi cer Human Resources. Light Commercial Vehicles Division. of Nissan. Effective January 1, 2004, became Executive Vice President and Chief Financial Offi cer of Renault.

Philippe Gamba Kazumasa Katoh Bruno Morange Tsutomu Sawada Chairman and C.E.O., RCI Banque Senior Vice President, Powertrain Engineering Senior Vice President, Senior Vice President, Advisor to the Chairman Light Commercial Vehicles Manuel Gomez Jacques Lacambre Michel de Virville (1) Senior Vice President, Northern Latin America Senior Vice President, Thierry Moulonguet (1) Corporate Secretary General, Executive Vice Advanced Vehicle Engineering and Research Executive Vice President and Chief Financial President, Group Human Resources Michel Gornet Offi cer (since January 1, 2004) Senior Vice President, Patrick le Quément Up to December 31, 2003: Manufacturing and Powertrain Senior Vice President, Corporate Design Pierre Poupel

(1) Senior Vice President, Mercosur Shemaya Lévy François Hinfray Benoît Marzloff Executive Vice President Executive Vice President, Senior Vice President, Strategy & Marketing Jean-Louis Ricaud Sales and Marketing Senior Vice President, Quality Luc-Alexandre Ménard Senior Vice President, International Operations (1)) Members of the Group Executive Committee chaired by Louis Schweitzer.

Renault in 2003 7 Commitment to good corporate governance

Board of Directors bylaws and Directors’ Charter

Good corporate governance At Renault we are fully committed adopted the other main undertake any other transactions is fundamental to the to the fundamental principles of improvements to corporate concerning securities issued by a confidence of shareholders good corporate governance— governance covered in the Bouton Group company to ensure that these and favorable perceptions transparency of transactions, report, in particular providing for an are ethical and comply with all of the company. Here Renault dialogue, risk control and annual review of Board applicable rules. has made clarity the priority, prevention of conflicts of interest. In membership, organization and adopting structures of control 1996, the Board of Directors operation. Combining management and and supervision that have adopted bylaws and set up internal supervisory roles, the Board proven their effectiveness. committees in strict accordance Backing up these bylaws, a examines Group strategies with the recommendations of the Directors’ Charter defines the rights presented to it by senior first Vienot Report on corporate and duties of Board members. The management and supervises governance, published in 1995. This Board has also defined rules implementation once they have report, followed by a second in July governing the use and disclosure of been adopted. The Board must give 1999, is the acknowledged standard confidential information. All those its prior consent to all major for French business. The bylaws with permanent access to decisions that may diverge from the define the role of the Board of confidential information must strategy already defined. Finally, Directors as the representative of consult a Compliance Officer before the Board is kept up to date on all shareholders. The Board also they exercise stock options or Group finances.

Honesty is the best policy

Is transparency the most need for transparency and sincerity, we got a hearing on most points and important part of good corporate which in turn has been an effective reached an agreement. governance? catalyst for progress. And in a highly Would you say that a lack of Rather than transparency, I would say complex international business context, sincerity could be expensive? that the most important thing is you are bound to fail if you do not apply Whether you’re talking about sincerity—meaning what you say. these principles. international business, financial Transparency is about saying what How do transparency and sincerity communications, safety or product you plan to do. That is now something work for the Alliance? quality, if you’re not being sincere, it no one can afford to neglect these If we hadn’t started out on a basis of very quickly becomes counter- days. Sincerity means going one step mutual trust with our Japanese partners, productive—and there is a price to pay, further and actually doing what you the Alliance would never have become as well as a complicated situation to said you would. That is really as successful as it is now. We see the manage. If you are sincere, the people fundamental to good governance. rewards of sincerity every day. The you are dealing with feel it and the trust How is Renault meeting the agreement recently reached in Iran gives that inspires leads to mutual respect. challenge? you another example. The Iranians’ view Do you think sincerity is going to Well, the first thing to emphasize is of the relationship between government become more important? the shared commitment of and industry is very different from ours, One thing is certain: customers want management as a whole to the but we were sincere about our to know the whole truth about the car Christian Husson principles involved. In this, the concerns—market forces, pollution they buy. And that entails an ethical Vice President, Alliance with Nissan had a major control, product safety, operating margin, side to the design and production of General Counsel impact in raising awareness of the and so on. And by just being ourselves, our cars.

8 Renault in 2003 Board Committees Code of Good Conduct

Three Committees, each an integral twice in 2003, with main subjects In 1998, Renault adopted a Code of part of the Board, assist the Board on the agenda including: Good Conduct, setting out rules for in the accomplishment of its ■ a move into Iran relationships with stakeholders mission and realization of its ■ strategic developments in inside and outside the Group. The objectives. Mercosur countries Code, updated by the Board of

■ The Accounts and Audit ■ customer expectations and Directors in 2002, is circulated to Committee, presided by an product positioning on managers as well as suppliers. It independent director, reviews international markets. covers issues that include personal financial statements and considers safety, protection of the company’s the appropriateness of the related ■ The Appointments and tangible and intangible assets, accounting methods. In 2003, Remuneration Committee compliance with the law, the Committee met three times, makes a crucial contribution to environmental standards, respect with major items on the agenda good corporate governance. for partners, supply and use of including: Comprising a majority of company funds, participation in

■ consolidated financial statements independent directors, it is community life and conflicts of of the Renault group and single- responsible for all proposals to the interest. entity financial statements of Board concerning the appointment Renault SA for the 2002 financial of new directors, the renewal of An Ethics and Compliance year and the first half of 2003 mandates at expiration, Committee set up in 2000 monitors

■ proposed dividend for the 2002 management compensation, and compliance with the Code and financial year the allocation of stock options. The related developments and defines

■ the 2002 balance sheet and its Committee met three times in communications policies for the 2003 audit plan. 2003 with main items on the issues concerned. The Code of Good agenda including: Conduct is backed by an Internal

■ The International Strategy ■ stock-option plan for 2003 Audit and Monitoring Charter,

Committee is concerned with ■ proposed appointment circulated to managers, which sets Group business outside the of two new directors out rules for the delegation of

European Union in its enlarged ■ compensation of the Group operational responsibilities. form, and reviews the Executive Committee and international development Renault Management Committee

strategies proposed by senior ■ conditions for the attribution Renault group managers meet on January 30, 2003. management. The Committee met of directors’ fees.

Organization and risk management Independent assessments

Risk management is fully integrated centralized. A Risk Management In 1998, Renault charged a in the Group’s business processes. Department is charged with specialized consultancy with Organizations and procedures, as continuing analysis of all kinds of a review of the membership, described in the Chairman of the risk that the business may face, at organization and operation of its Board’s report on internal control, the same time favoring cross- Board of Directors. A second have been put in place for the company responses to issues of assessment was presented identification, control, common concern and ensuring to the Board on February 27, 2001 measurement —when possible— action plans are adopted as and on October 22, 2003 the Board and treatment of risk relating to necessary. It reports to the Audit renewed the review carried out the Group operations. These include Department. Finally, the Accounts previous year to assess its market risk, operating risk and legal and Audit Committee is informed of operation and scope for risk. Management of some forms of the main risks and the findings of improvement. risk, in particular financial risk, is related audits.

Renault in 2003 9 10h17 École à Viry-Chatillon, France

An automaker’s values are on show in the cars it produces. And like the Mégane Coupé-Cabriolet here, all Renault products testify to a powerful brand identity.

10 Renault in 2003 1 The Renault Brand—winning recognition for a strong identity

Renault is building its business worldwide. In this, a powerful brand identity is essential to success. And as an established créateur d’automobiles, that is precisely what we have: an identity based on anticipating customer expectations and responding with innovative solutions. Along with the ability to inspire enthusiasm and passion.

Renault in 2003 11 1 The Renault Brand—winning recognition for a strong identity

Powerful identity

Créateur d’automobiles

A convincing brand identity is Innovative design features reflect both reassuring and inspiring— a constant drive to offer customers standing for quality products something extra, as exemplified by with genuine appeal backed by the daring lines of the Espace IV, outstanding customer relations. a vehicle offering the exceptional With Renault, motorists know they roominess and modularity worthy are buying a car that combines the of a standard-setter for MPVs on the very best in fundamentals: safety, European market for nearly 20 years. roadholding, braking, robustness, Similarly, the powerful sweep of the reliability, performance and fuel Mégane II body shows the strength consumption. that makes it the safest car in its But, each Renault vehicle must category. The distinctive personality Kudos for Renault also have a special personality of Renault models is essential to the and illustrate in its own way the appeal of the brand and consolidation identity of the Renault brand. of its image, as their success with Mégane II, named Car of the the public and specialists shows. Year 2003, is far from the only prizewinner in the Renault line-up. Auto Plus readers voted Scenic II the best new model for 2003 after choosing Megane II in 2002. And Brazil’s Quatro Rodas magazine named Clio, Clio Thalia (three-box version) and Scénic Best Cars in their categories for the third year running, while Clio won the highest marks for customer satisfaction. The findings published in Quatro Rodas were from a survey of owners of the 30 best-selling models in Brazil carried out by Research International, an independent organization recognized for its expertise in 60 countries. Renault Master took top place for light commercial vehicles, winning the Argus du Véhicule Utilitaire 2004 trophy awarded by a jury of 15 specialized journalists and professionals in France. In Germany, Megane II was named the preferred car for eastern regions at the Leipzig Motor Show and 110,000 readers of Auto Motor und Sport magazine voted Espace IV the world’s best car in the MPV category, placing Clio and Twingo in the top three for

Espace IV—the European benchmark for large MPVs. their categories.

12 The Renault Brand—winning recognition for a strong identity Renault in 2003 Scénic II: Outstanding safety is built into Europe’s top-selling Mégane range.

The safest cars on the road

The outstanding active and passive ■ Prevention —helping drivers to situations, correcting shortcomings The approach has proven its worth, safety performance of Mégane II and anticipate risk and take all the action without taking their place. since Renault’s range is now Europe’s Scénic II refl ect Renault’s integrated need to keep the likelihood of an safest. Five of our models have been vision of safety as an interactive accident to a minimum. ■ Protection —maximum protection awarded the top fi ve-star rating in system. Safety considerations are for all occupants in the event of an Euro NCAP crash tests—Mégane central to product design, with ■ Correction —helping drivers deal accident. II Hatch and Sport Hatch, Scénic II, priorities coming under three headings : with diffi cult conditions or emergency Laguna II, Vel Satis and Espace IV.

Renault in 2003 The Renault Brand—winning recognition for a strong identity 13 1 The Renault Brand—winning recognition for a strong identity The Mégane II line-up— leading Europe

The Mégane range: Renault brought seven body styles to market in just 17 months, a major industrial feat and an innovative response to customer expectations.

Take your pick

The Mégane II range has added ■ The five-seat Scénic II and ■ Developed as an integral part of ■ The Mégane station wagon, heir five new bodies since the rollout of seven-seat Grand Scénic—23 cm the project from the beginning, the to the spirit of the Laguna station the Hatch and Sport Hatch versions longer—offer the first-ever choice four-door Mégane II sedan avoids wagon, has a wheelbase 61 mm in 2002. These include Scénic II, between two compact MPVs with the usual pitfalls of a new version longer than the hatchback, a Grand Scénic (presented in 2003 different lengths, each combining with a trunk, which often looks feature it shares with the four- and put on the market in early the traveling comfort of an MPV as if something has been simply door sedan version. This makes 2004), Mégane Coupé-Cabriolet, with the driving pleasure of a sedan. tacked on. Size, styling and cabin for easier access at the rear, as the Megane four-door sedan space give it the credentials of a well as more cabin space and and the Mégane station wagon. ■ The Mégane Coupé-Cabriolet vehicle from a higher segment. added luggage room. The Mégane Offering the widest choice in its breaks new ground in its class station wagon is the roomiest car class, the Mégane II range is well with a folding glass roof. This in its category. placed to win a healthy share of a model is made at the Douai plant segment that represents a third of in France on the same assembly the total Western European market. line as Scénic II and the Mégane II Hatch, and shares 63% of its components with them.

14 The Renault Brand—winning recognition for a strong identity Renault in 2003 Left to right : Scénic, Grand Scénic, Mégane Station Wagon, Mégane Sedan, Mégane Hatch, Mégane Sport Hatch, Mégane Renault Sport, Mégane Coupé-Cabriolet.

Safety first International horizons

The Mégane II Hatch, Sport Hatch jointly funded by Renault and The Mégane II project was a large share of the market. The and Scénic II all scored maximum PSA. A reinforced structure with from the start intended for the international successes of these five-star ratings in Euro NCAP impact-absorbent areas and international market, the aim models is backed by the choice of crash tests, rewarding the strict programmed crumpling make for being to generate 20% of sales production sites, with the Mégane safety requirements built into their optimal deformation in the event of outside Western Europe. The station wagon made at the development from the start. Design impact, while the Renault System Mégane II station wagon and four- Palencia plant in Spain alongside factored in the recommendations for Restraint and Protection (SRP) door sedan are already making a the Mégane Hatch and Sport of the Laboratory of Accident provides maximum protection for significant contribution to Renault’s Hatch, while the Mégane sedan is Research, Biomechanics and Human occupants in all seats. international expansion. The made at Bursa in Turkey. Behavioral Studies, an organization station wagon has great potential, A high proportion of components notably in Northern Europe and are manufactured locally. All told, Italy where this type of vehicle is the Mégane II range will be on particularly popular. The Mégane offer in 75 countries, with sedan four-door sedan is well placed versions accounting for the bulk of on markets outside Western sales outside Western Europe. Europe where sedans account for

Renault in 2003 The Renault Brand—winning recognition for a strong identity 15 1 The Renault Brand—winning recognition for a strong identity

An eventful year for new products

Passenger cars

Trafic Passenger and Trafic Generation The new Kangoo switches category go MPV

New Kangoo moves closer to a factors in the same environmental Trafic Passenger deserves its name sedan style specification, with policies as Mégane II, with 95% more than ever with features that a sleeker front end and greater recyclable by weight. now include velour upholstery, interior comfort. New features floor carpets and adjustable include a more functional and The New Kangoo 4x4 is a full- driver seat and steering wheel. plush dashboard, and customers fledged SUV. Offering all the added Air conditioning, heat-reflective can now opt for leather and cloth features of New Kangoo, it retains windshields, air recycling and the upholstery unlike any other vehicle the same permanent four-wheel Carminat navigation system are in its category. Quieter, better drive unit developed by Nissan. available as options. equipped and offering a new 1.6 Together these features confirm Trafic Generation, with room for liter 16-valve engine with proactive Kangoo’s leading position in the seven people and their luggage, transmission, New Kangoo also leisure activity vehicle segment. features a modular interior developed in partnership with French coach-builder Gruau. This includes two swiveling front seats, a fold-up table and a rear seat that can be used as a bed.

New Kango 4x4, on and off the road—an all-terrain SUV combining performance with efficiency.

16 The Renault Brand—winning recognition for a strong identity Renault in 2003 Trafi c Passenger and Trafi c Generation redefi ne family travel. 1 The Renault Brand—winning recognition for a strong identity

An eventful year for new products

Light commercial vehicles

Master—a major overhaul

In addition to a redesigned front end, the new Master offers a choice of two new engines and a completely remodeled cab. The gear stick is now integrated in a redesigned dashboard. Powered with either the Nissan-sourced 3.0 liter dCi 140 or the Renault 2.5 liter dCi 100, the new Master has ABS as standard equipment and is the only vehicle in its category to offer emergency brake assist to go with it. Result: in 2003 Master remained the best-selling panel van in France.

New Master got a makeover in 2003.

18 The Renault Brand—winning recognition for a strong identity Renault in 2003 Engines: demand for diesel on the rise

Two long-term trends continue to has increased, with a series of dCi shape demand in the world’s main engines providing greater power and markets. The first is the rising torque including the 100hp 1.5-liter popularity of diesel power, especially and 135hp 2.5-liter units. in Europe. Car buyers are particularly A programme now in progress keen in France, where diesel engines will ensure compliance with the now account for over two-thirds of forthcoming Euro 4 environmental new vehicles sold. Second is the standard. Finally, in gasoline- introduction of exhaust-emission powered engines, Renault has standards requiring carmakers to introduced a version of the F4RT hone existing expertise at every turn. 2-liter turbo engine for the Mégane With its additive-free particulate filter, Renault Sport. This combines 225hp designed first for the G9 and then for with outstanding driving pleasure the F9 and launched in 2003, Renault and an exceptional environmental addresses both developments. And performance for such a high specific

K9K 1.5 liter dCi engine: powerful, fuel effi cient and environmentally friendly. the range of available power outputs output.

Be Bop and Be Bop

The Be Bop and Be Bop concept anchored. The gearlever rises over this their function and invite contact. cars unveiled at the Frankfurt motor central arch, which houses the other On-board technology is unobtrusive: show add a new note of fun to main controls. The rear seats slide Key driver information (speed, the compact MPV concept in two under the front seats at the flick of a engine revs, etc.) is shown on two interpretations—an all-terrain SUV switch, freeing space for luggage. superimposed LCD screens, while and a sporting model. Be Bop and Be Bop carry Renault’s a third screen on a swivel base Two rear-hinged doors with no centre Touch Design ergonomics to new levels atop the dashboard displays other pillar make it easy to get in and out, of sophistication, as exemplified by the information—navigation guidance, while the interior is structured around steering wheel, with its “hand print” music options and communications a central arch to which seats are motif. Likewise, all controls suggest links.

Renault in 2003 The Renault Brand—winning recognition for a strong identity 19 1 The Renault Brand—winning recognition for a strong identity

Quality service—a strategic priority

New ways to buy a car

Growing customer demand Increasingly, the priority for give customers a clear view of similar options in Brazil and the for problem-free mobility and customers is to be able to get costs—not only of the vehicle Rombo plan in Argentina. effective financial planning around freely, rather than car itself, but also of maintenance and In France, the New Deal offering calls for the highest standards ownership for its own sake. possible replacement with another launched in 2001 includes loans of quality at all times. Renault In response, Renault, via its model in the course of the contract. with a buyback commitment, is rising to the challenges subsidiary RCI Banque, has Alternatives to traditional car loans leases with a purchase option and with moves that include a new applied worldwide a broad range such as leasing and contract hire buyback clause, and contract hire. approach to distribution. of financing options taking into are available in most countries in In 2003, New Deal contracts account the differences in legal which Renault operates. Examples headed up sharply to account for systems from one country to the include Easyfin in Belgium and a quarter of all sales to individual next. In each case, the aim is to Multiestreno in Spain, as well as customers.

Focus on expertise in sales and maintenance

Remodeling of the Renault sales products. Maintenance and repairs network begun in the mid-1990s are also naturally a crucial component has shown its full effects with the of customer relations, and quality application of new EU legislation service is now available from 452 from October 1, 2003. Despite Renault Minute facilities offering on- some concentration, our network the-spot repairs in France and 265 in will remain large, with 12,000 other countries. The Renault Minute outlets expected to be in operation Bodyshops network, specialized in in Europe in 2005. Under the new bodywork, is also expanding rapidly, regulations, manufacturers can with over 190 locations—half of them either take a selective approach, outside France—in operation at the authorizing dealers on the basis of end of 2003. quality criteria and, in some cases, capacity requirements, or they can Other components of the Renault grant exclusive rights on a territorial customer relations network include basis. Renault has naturally opted for Business Centers for fleet managers selective distribution, better suited to and business customers, and Renault the development of a homogeneous Assistance, one of France’s leading network with the required providers of breakdown assistance. professional know-how. In other parts of Europe, Renault has Meeting Renault quality standards forged alliances with local operators demands significant investment, not offering similar services. Finally, we only in equipment and technology, have customer relationship service but also in training. The remodeled sections in 30 countries. In 2003, network will continue to apply the French unit was rated the transparent pricing policies, in country’s top customer service in particular through flat rates for a BearingPoint-TNS Sofres survey

Reaching customers—Renault has the largest network in Europe. repairs, and offer a full range of published in Le Point magazine.

20 The Renault Brand—winning recognition for a strong identity Renault in 2003 Aftersales service comes into its own

Aftersales service is a priority Improving standards of customer at Renault, where a specialized services is also factored in from department supervises networks the start of new development worldwide to ensure that the projects by vehicle and powertrain necessary skills and equipment engineers. The objective is to are applied to the maintenance of design vehicles that can be easily Renault vehicles. The shift from repaired and ensure that any traditional mechanics to electronics malfunctions are rapidly diagnosed and multiplexing makes this all the using special tools. This marks an more vital. Today simply listening important new departure making to the engine or inspecting life easier for both technicians and components is no longer enough— customers by offering a promise the same problems may have a of quick and completely reliable variety of different causes. repairs. To meet the challenge effectively, Renault provides full training in new vehicle technologies through special seminars and ongoing programs. Support is also available from “Cotechs”—specially trained mechanics who provide expert advice as needed in the A new Renault dealership in France: easily identifi able, customer-friendly and contemporary. dealerships, in particular for the diagnosis of breakdowns. In 2003, 520 new Cotech positions were set up and the aim for 2004 is to add a further 600.

Renault SITe—serving customers online

The Internet, like other forms of Russia, Japan and Australia. information technology, offers new The benefits are two-fold, since sites opportunities to deploy strategies raise customers’ overall awareness that consolidate Renault’s competitive of Renault while providing practical position. advice to those considering buying With Renault SITe, the group is the a new car. The results are highly European leader in this area of e- promising. Two in-house surveys commerce, with the monthly visits to show that overall some 30% of its sites topping the two-million mark requests for information lead to the in September 2003. sale of a new or used vehicle— And expansion continues in other irrespective of the brand—in the four parts of the world, with sites now months following initial contact.

A specialist in Colombia diagnoses a car’s electronic systems. serving markets in Brazil, Turkey,

Renault in 2003 The Renault Brand—winning recognition for a strong identity 21 1 The Renault Brand—winning recognition for a strong identity

2003 ranges

Espace Vel Satis

Laguna Laguna Station Wagon Scénic

Mégane Hatch Mégane Renault Sport Mégane Coupé-Cabriolet

Mégane Sedan Mégane Station Wagon Clio

22 The Renault Brand—winning recognition for a strong identity Renault in 2003 Twingo Kangoo Car Kangoo Van

Trafic Trafic L2H2 Master

SM3 SM5

Solenza Pickup

Renault in 2003 The Renault Brand—winning recognition for a strong identity 23 Competitiveness is built on quality, verifi ed at every stage of design, development and production.

24 Renault in 2003 2 Competitiveness: aiming to be one of the best

Competitiveness is an essential goal for any business. And Renault’s strategy for profi table growth calls for a constant drive to rank among the most competitive European manufacturers in every area of operation—in the Alliance it is building with Nissan, and through its ties to suppliers and other partners.

Renault in 2003 25 2 Competitiveness: aiming to be one of the best

Keys to profitable growth

Quality

Renault’s strategy for profitable Renault aims to constantly raise growth requires an unswerving the quality and reliability of commitment to competitiveness products and services, creating in terms of quality, costs and vehicles that meet ever-higher delivery times. standards of safety, performance and innovation. In this, we build on the day-to-day commitment of staff at every stage in the vehi- cle life cycle, from design, devel- opment and production to sales, maintenance and repairs. Rewarding their efforts, the inci- dent rate on new vehicles fell by more than 20% from 2002 to 2003, a trend that staff in our engineering offices and plants are intent on maintaining. Similarly, in aftersales new tools are helping teams to identify and remedy problems more quickly— and more effectively. All workshop personnel receive an EasyClip kit simplifying diagnostics, and new systems are being developed to allow experts to make direct online assessments of more com- plicated breakdowns. Renault aims to be the most com- petitive manufacturer on our mar- kets in terms of quality, costs and delivery times, a strategic goal that also plays an essential role in our Alliance with Nissan. To achieve this, we are committed to the highest standards of qual- ity and customer satisfaction at all times. Quality control at the Douai plant in Northern France.

Suppliers: looking to the long term

Renault’s aims for long-term management, and more. several times a year, as well as the partnerships with suppliers, building Supplier relationships are also action of the Renault Institute, which on agreed rules in areas ranging from consolidated through the Suppliers’ provides quality and management fi nance and technology to working Council, which brings together Renault consultancy services, principally to conditions, eco-design, life cycle management and key suppliers Renault and its partners.

26 Competitiveness: aiming to be one of the best Renault in 2003 Costs

RCI Banque: underpinning Renault’s competitiveness Cost reduction is central to Renault strategy. A first drive, which brought savings of Wholly owned by Renault, the RCI customers and the Renault and Nissan present in 18 countries in Western €3 billion in three years, was Banque group succeeded Renault brand networks. In this, it backs the and Central Europe, in Argentina, renewed for the same period in Crédit International on January 1, market development of Renault and Brazil and Mexico. RCI Banque also 2001, targeting annual savings 2002. Its mission is to offer a full the Alliance, fi nancing over a third of makes a highly signifi cant contribution of €1 billion. It was completed range of fi nancing options and Renault and Nissan sales, as well as to the Renault group’s operating successfully. The main focus was services to individuals, business international expansion. RCI Banque is margin (€367 million in 2003). on purchasing, an area where savings have been achieved through closer partnerships Time to market with suppliers as well as the economies of scale generated by our Alliance with Nissan via the joint Renault Nissan Purchasing The Mégane II Hatch and Sport time to market makes for finan- has also helped to get cars to Organization (RNPO). But we have Hatch were developed in just cial savings, but also helps to customers more quickly, with also made progress in production 29 months compared with leverage sales, since shorter 100% of Twingos and Clios now efficiency. This is confirmed in 46 months for the previous gener- development times mean quicker reaching destination in under the Harbour Report on vehicle ation, a performance that reflects responses to shifts in demand. five weeks. In addition, sched- plant productivity for 2002, which effective streamlining of prod- Vehicle production and deliv- ules are more reliable since a shows an excellent performance uct development and produc- ery are also being speeded up. full 85% of cars reach customers from Renault. tion engineering processes. The Renault is the only European at the date announced at order Three of our assembly plants Renault Technocentre has made manufacturer applying a deliver- compared with 60% three years ranked among the five best a major contribution to this with to-order approach for its entire ago. New Distribution has thus performers in Europe, and the a vehicle project approach based range under our New Distribution made for a significant reduction Valladolid plant in Spain is on the presence of design and program. This is an effective of inventories at both plants and Renault’s top plant with produc- engineering teams on a single means to make the most of an dealerships—despite the inevi- tion time per vehicle averag- site, ensuring greater efficiency increasingly extensive range. table rise when new models are ing 16.1 man-hours. The same is and speedier processes. Reducing The New Distribution project launched. true where powertrains are con- cerned: Renault is a leading con- tender with production times of 1.6 hours for the D7 engine and 2 hours for the D4 unit. Other cost savings have been achieved in areas that include engineering, warranty costs, IT expenditure, costs linked to inter- national transactions and general expenses.

Delivery times have been slashed.

Renault in 2003 Competitiveness: aiming to be one of the best 27 2 Competitiveness: aiming to be one of the best The Renault-Nissan Alliance: continued momentum

Five years on: an exemplary Alliance

The Alliance founded Renault and Nissan put their signa- By the same token, these distribution and the cross-sourcing by Renault and Nissan tures to the agreement underpin- strengths—in technical and mana- of powertrains. Today such in 1999 brings together ning their Alliance on March 27, gerial practices, manufacturing, initiatives are gathering strength. two independent yet 1999. Five years on, this unique purchasing, and international The results achieved by the complementary companies, initiative has become a bench- deployment—have served shared Alliance and the scope for future each with its own culture and mark for the rest of the automotive goals for development based on developments these create are brand identity, through a shared industry. For the Renault-Nissan sound finances. The results speak based on Renault and Nissan’s strategy for profitable growth Alliance combines independence for themselves, with both finances joint commitment to work together and a community of interests. and mutual respect with a common and sales firming over the past five and respect each other’s culture. United for performances each strategy and shared interests—and years, even as rising stock prices With an equity structure ensuring has a direct interest in the in so doing has proved its ability confirm investor confidence. mutual benefits and strong other’s results, since Renault to make a key contribution to each These factors generated value- organization, staff from both holds 44.4% of Nissan and partner’s competitiveness. creating synergies from the very Groups have the commitment and Nissan 15% of Renault (non- Since 1999, complementary start, with joint projects getting resources to pool their skills in voting shares). strengths have driven a host of under way in very short order working towards a shared goal of shared projects from initial devel- in areas such as development, profitable growth. opment to successful completion. purchasing, production, logistics,

Nissan and Renault cars are assembled side by side at Nissan’s plant in Aguascalientes, Mexico.

28 Competitiveness: aiming to be one of the best Renault in 2003 Working together pays off: a functional task team in action.

Structured cooperation

Alliance Board members ■ Thirteen Cross-Company ■ Renault Nissan Information Teams (CCT) bring together Services (RNIS) is a subsidiary staff members from Renault and coordinating IT/IS teams to Louis Schweitzer, President François Hinfray Nissan to explore scope for syner- share information systems and Carlos Ghosn, Vice President Norio Matsumura gies between the two companies, telecommunications worldwide. Pierre-Alain De Smedt Nobuo Okubo overseeing their implementation. Georges Douin Tadao Takahashi Nine Functional Task Teams (FTT) ■ The Global Alliance Logistics are charged with implementing Committee (GALC) monitors the synergies. progress towards goals for international logistics ■ The Renault Nissan Purchasing Organization ■ The Alliance Logistics (RNPO) is a purchasing Taskforce (ALT) acts as a subsidiary operating worldwide to coordinator and support unit generate savings, by sharing the for the Cross-Company Teams, purchases of both companies. reporting back to the Global Alliance Logistics Committee on opportunities for cost reduction.

Toolmakers from Renault Douai (Northern France) and Nissan examine tools to produce Mégane.

Renault in 2003 Competitiveness: aiming to be one of the best 29 2 Competitiveness: aiming to be one of the best

Progress in the Alliance

Common platforms and powertrains

Together, Renault and Nissan Two of the three common platforms Almera and Micra. Similarly, the powertrains. Among other things, rank fourth worldwide in developed by Renault and Nissan F9 engine equips the Primera, projects concern infinitely variable automobile manufacturing, are now on the road. The B while the Clio sedan produced in transmissions, variable compression with more than five million cars platform launched for Micra, will Mexico under the Nissan Platina engines, after-treatment of exhaust sold each year representing be used for the next Clio, while name is powered by the K4 emissions, and homogeneous over 9% of the world market. the C platform—first introduced gasoline engine coupled with the combustion. Advanced technologies Building on the complementary for the Mégane II range—will be JB gearbox. in areas including hybrid drive units, strengths of Renault and used for Nissan’s future mid-range fuel cells and telematics are also Nissan in sales and production, model in Europe, and the next ■ Nissan for Renault: Vel Satis and important themes. the Alliance enhances Primera will share the D platform Espace IV are already fitted with competitiveness for both with future Renault models in the Nissan’s V6 3.5 liter gasoline partners. In 2003, cooperation D/E segment. Preparations for engine. Mégane II uses the made further progress, common sourcing for the Alliance’s Nissan ND six-speed transmission particularly in common D platform began through RNPO and the four-wheel drive version purchasing through subsidiary in 2003. The aim is to have ten of Kangoo a Nissan hydraulic RNPO, which showed a common platforms serving all coupling. Since the end of 2003, vigorous rise. Alliance vehicles by the end of the the four-cylinder common rail decade. Progress to date puts this diesel unit used on Nissan’s Patrol goal well within reach. and X-Terra has also equipped At the same time, the move to Renault Master and Mascott vans. share powertrains is gathering momentum. Shared efforts are also preparing for the future. Renault’s Powertrain ■ Renault for Nissan: the two Engineering Department and versions of Renault’s K9 diesel Nissan’s Research Department engine and the JR and JH are working together on the Gearboxes are just one of the components gearboxes equip Nissan’s development of traditional shared by the Alliance.

Joint production

Sharing of best practices, particu- traditional AQR quality rating sys- by Renault and GM Europe, is also larly in production, is a key goal tem at all Renault sites. assembled by Nissan in Spain. It is of the Alliance. Renault thus gave Common systems are an important sold under the Renault Trafic, Opel Nissan the benefit of its expertise factor in the development of cross- and Vauxhall Vivaro and Nissan in production ergonomics, at the manufacturing operations, as many Primastar nameplates. And in same time drawing on Nissan’s examples already show. In Mexico, Brazil, Renault assembles Nissan experience to enhance the Renault Nissan assembles Scénic and Clio Frontier and X-Trail, while Nissan Production Way. Since January and markets the Clio sedan under markets Renault Master vans under 2003, the Alliance’s AVES vehicle the name Nissan Platina. In Europe, the name Interstar. evaluation system has replaced the the X83 compact van, developed

30 Competitiveness: aiming to be one of the best Renault in 2003 Sharing expertise

The Alliance’s success is in large ■ employees in joint subsidiaries Odile Desforges part attributable to the exchange (Renault Nissan Purchasing Each progresses, Chairman and of personnel, a process directly Organization and Renault Nissan drawing on the other Managing involving some 300 staff members Information Services). partner’s best Director, Renault including senior managers, Nissan Purchasing engineers and other experts. This ■ inter-regional staff exchanges. Organization concerns: Overall, operations of the Alliance ■ exchange of expatriates between concern a much larger number, the two parent companies with several hundred people work- How does RNPO contribute to supplier base. Suppliers have to share best practices and ing in Alliance structures, many Group performance? welcomed the resulting clarification, consolidate expertise in key in organizations such as Cross- RNPO buys parts on better terms and as has been confirmed by those areas, at the same time fostering Company Teams and Functional when a function is handled by RNPO, interviewed in a survey we conducted. mutual understanding. Task Teams. decision-making is quicker—not only They consider RNPO one of the most for common technical specifications, effective purchasing organizations in ■ participation of expatriates but also for the choice of suppliers. the automobile industry, resulting as in Alliance projects for the The same goes for negotiations it does from a process that is clearly development of common with suppliers. RNPO gives Renault defined, transparent and based on platforms, engines and and Nissan common access to objective criteria. transmissions. all suppliers, internationally, with opportunities for shared sourcing How do you ensure overall cohe- in all parts of the world. In this type sion between RNPO and pur- of structure, results are what really chasing teams at Nissan and count, helping Renault and Nissan Renault? develop the common procedures I am responsible for both RNPO and needed to achieve their goals. And purchasing at Renault, and my oppo- the underlying dynamics ensure that site number at Nissan has the same each partner progresses, drawing on dual role. We each ensure that the the other’s best. direction taken at RNPO matches pur- chasing strategies in the business we What has been the biggest bene- represent. In particular, we ensure fit for Renault? that RNPO keeps to quality and price Raising quality standards on incom- criteria set by Renault and Nissan. ing parts in plants to the same level as at Nissan. What will be the main focus for RNPO in 2004? And for Nissan? Since January 2, 2004 we have Progress has mainly been in business moved into the third stage for RNPO, economics, with new tools offering with 70% of purchasing turnover now a better understanding of cost on a common basis. In addition to Mexico shows the way Nissan plant in Aguascalientes (Mexico). structures. vehicle parts, RNPO now also han- dles purchases of machinery and Where did RNPO make most equipment, plus all aspects of logis- Cooperation between Renault and sidiary Renault Nissan Purchasing headway in 2003? tics. With this new stage, we will be Nissan is on an exemplary scale Organization operates on the spot We continued to move ahead with extending RNPO’s reach to all coun- in Mexico, where shared produc- and shared back-office structures the second stage in the development tries where Renault and Nissan have tion concerns Renault’s Scénic and are expanding with a steady rise in of RNPO with 43% of purchasing in common production facilities. We will Clio, and Nissan’s Platina—the last Renault sales outlets, two-thirds of common. We also defined common be a truly global organization with an based on the Clio sedan. Joint sub- them owned by Nissan dealers. strategies and selected a common integrated management structure.

Renault in 2003 Competitiveness: aiming to be one of the best 31 In 2003 over 23% of Renault sales were outside Western Europe. Here Mégane in Turkey.

32 Renault in 2003 3 Building a global group

Today Renault is a French group with worldwide reach through direct moves into new markets, associated brands Dacia and Renault Samsung Motors, the Alliance with Nissan and our interest in AB Volvo.

Renault in 2003 33 3 Building a global group Reinforcing positions in Europe and worldwide

Leading the field in Western Europe

In 2003, Renault held onto a While the automobile market steady 4.1% share of the world contracted 1.6% in Western market, at the same time Europe, the Renault brand ranked consolidating its ranking as first for passenger cars for the Europe’s number-one brand second year running. Number one for passenger cars and in France, Spain, Portugal and light commercial vehicles. Belgium, we count among the top Expansion outside Western three brands in the Netherlands, Europe continued with a 9% the United Kingdom, Italy and rise in sales, reflecting firm Austria. Renault is also number one trends in Central and Eastern in Europe for diesel vehicles, with Europe, recovery in Turkey, 13% of the market. Renault and Dacia: two separate sales outlets managed by the same dealer, growth at Dacia and a healthy In 2003, Renault took 10.6% of near Bucharest (Romania). showing from Renault Samsung the Western European market Motors in Korea. Expansion of for passenger cars, registering production facilities went hand 1,504,454 units. market. Twingo held onto its top for nearly half the total. Espace in hand in with sales growth, In France, we confirmed our slot for small city cars, and Kangoo, maintained its leading place in with active contributions number-one spot with 546,014 new now in a new phase, took first the large MPV market in Europe, from Renault group brands registrations representing 27.2% of place in the leisure-activity vehicle with 19.1% of the segment. Dacia and Renault Samsung the market. Mégane and Clio were segment. Laguna was again third among Motors. Finally, as the principal the best and second best-selling In mid-range cars, Mégane beat volume manufacturers’ models on shareholder of the AB Volvo models on the market, respectively. expectations with a 16.5% rise in a segment that showed a marked group, Renault has a significant Including Laguna and Twingo, four volumes making it the best-selling decline in Europe. Finally, Vel Satis stake in the world truck market. Renault models counted among car in Western Europe with 4.1% of recorded 13,300 registrations, the ten most popular on the French the market. Number one in France, benefiting—like the Espace—from market in 2003. Spain, Portugal and Belgium, a high-end version mix. Renault is also number one in Mégane is making strong gains in For the sixth year running, Renault Spain with 12.7% of the market, other markets and counts among also held onto its top share of in Portugal with 14.6% and in the top three in the Netherlands the market for light commercial Belgium with 11.7%. The top and Austria. Scénic II, which vehicles, which contracted 3% import brand in Germany for the reached showrooms in June 2003, over the year, with 267,700 new fourteenth consecutive year, took over 23% of the European registrations representing a 15% with 6.3% of the market, Renault market for compact MPVs. The share. Renewed in spring, the counts among the top three in the Coupé-Cabriolet, station wagon Kangoo Express was the best- Netherlands, the UK, Italy and and sedan versions of the Mégane selling small van in Europe, taking Austria. launched at the end of 2003 23.6% of the market in its segment. In the small passenger car reinforce Renault’s position on this With Trafic sales up 20% and segment, Clio turned in another strategic segment. Master holding on to its top place strong showing, ranking second in Further up the range, Espace IV on the French market, Renault took Western Europe with 460,000 sold, sales rose 30.6% from 2002, with fourth place on the compact van accounting for 3.3% of the total the high-spec version accounting market with an 11.2% share.

34 Building a global group Renault in 2003 Healthy growth in Group sales outside Western Europe

Renault sales outside Western Market performances were Europe rose 9% in 2003. patchier in Latin America. In Mercosur countries, Renault, like In Central Europe, where market other manufacturers, continued to growth reached 11.5%, Renault face extremely difficult conditions. consolidated its number-two In Brazil, we held onto our number- place behind Skoda. Ranking first five place with 4.3% of the market. in Slovenia and Croatia, Renault In contrast, sales rose sharply in posted gains in its share of the Mexico, where they were up 17.3% Polish market. to 16,116 units, as well as in Colombia, up 9.3% to 16,950. In Eastern Europe, Group sales were up 17.1%. In Russia, they Sales in the Asia-Pacific area reached a new record, reflecting reached 123,758 units, driven by the success of the Clio Symbol, a good performance from Renault while in Turkey Renault reaped the Samsung Motors in Korea. full benefit of the strong market recovery, raising sales 160.2% Finally, total sales in northern and accounting for 15.7% of the Africa, other parts of Africa and the market for passenger cars and light Middle East edged up by 1.9% to commercial vehicles. 69,735 units, with gains recorded in South Africa and Morocco.

Mégane on the streets of Istanbul (Turkey).

Renault group sales worldwide (cars + LCVs, units) 2002 2003 Change % Renault group 2,404,977 2,388,958 -0.7 % of which ■ Renault 2,230,103 2,208,900 -1.0 % ■ Renault Samsung Motors 117,085 111,431 -4.8 % ■ Dacia 57,789 68,627 +18.8 % Western Europe 1,870,344 1,806,443 -3.4 % Rest of the world* 534,633 582,515 +9.0 %

*Central and Eastern Europe (including Russia and Turkey), Asia-Pacifi c, Latin America, Africa-North Africa-Middle East.

Renault in 2003 Building a global group 35 3 Building a global group Renault Samsung Motors— on course for growth

A growing range

Renault Samsung Motors Renault Samsung Motors sales, sedan, with sales of the latter up-market status. Driven by steady continued the development mainly on a domestic market topping 350,000 units. The two growth in its sales network, with begun in 2000, moving into the that suffered a steep 18.7% fall Renault Samsung Motors models the number of outlets up from second stage of its strategic in 2003, declined a much more have thus proven winners on the 39 in September 2000 to 151 in business plan. By 2010 this moderate 4.8% to 111,431 units. Korean market, rewarding high July 2003, as well as expansion aims to contribute significant Support came from the launch of levels of quality, reliability and of the range, Renault Samsung volumes to Renault group the SM3, which took 14.3% of the safety—and helping to establish Motors enjoys promising near- production, including output for market in its segment, along with Renault Samsung Motors’ image term prospects with a major model exports. the continuing success of the SM5 as a youthful, modern brand with launch planned for 2005.

Samsung SM5 has acquired an excellent reputation for quality.

Quality production facilities

In pursuing its strategy for growth, its own right, Renault Samsung Renault Samsung Motors benefits Motors also draws strength from from a key strength—the quality its own technical center and of its Busan factory. Opened in styling department. All told, the 1996, this highly efficient plant company—which also benefits now has an annual capacity of from synergies with Renault and the 260,000 vehicles built to the most Renault Nissan Alliance—is well demanding standards of quality. placed to become the main hub for As a vehicle manufacturer in Renault’s business in the region.

36 Building a global group Renault in 2003 Dacia readies an entirely new range

Solenza launch X90 poised for market

Marking a first step in the renewal Backing up expansion, on May X90 is a key component of the Dacia sales totaled of the Dacia range, the Solenza 19, 2003, Dacia opened a new Group’s growth strategy. Featuring 68,627 units, up 18.8% from is the standard bearer for a new distribution center near its Pitesti attractive, modern design, X90 2002, rewarding the success visual identity with a blue shield plant to supply all Dacia dealers combines reliability and roomy of its new Solenza, which topping a V-shaped radiator grill. in Romania and its distributors in on-board comfort. The size of a accounted for 42% of the total. Renault aims to sell 200,000 of other countries with spare parts family sedan, it is well equipped Dacia has also benefited from these cars by 2007, with exports and accessories. It will later also and highly affordable, with prices firm trends for other models accounting for a quarter of the take over local distribution of parts starting at €5,000 in Romania, in its range, while exports total. Dacia invested €40 million in and accessories for Renault and making it well suited to target reached 11,292 vehicles or the launch, including €30 million for Nissan brands in these markets. markets. With development of over 16% of unit sales. The model-related investment. Since its the powertrain and rolling chassis forthcoming launch of the launch in April 2003, Solenza has drawing on Renault expertise, X90 X90, targeting new markets, won a top 22.1% of the Romanian will use a platform derived from the will mark a fresh stage in the passenger car market. Alliance’s B platform. Production development of the brand. is scheduled to start up in the summer of 2004 at Dacia’s Pitesti plant in Romania. It will then be assembled in Russia, Morocco and Colombia. A major project is also planned in Iran.

Dacia Solenza.

Renault in 2003 Building a global group 37 3 Building a global group Winning a place on new markets

Production of the X90 , initially centered on Romania, will also call on sites in Russia, Morocco, Colombia and Iran

Renault is expanding Russia: targeting annual have led Renault to speed up Morocco: building on long- production and sales sales of 60,000 cars development in Russia, where standing ties operations beyond Western Sales of Renault vehicles it has been present for the past On July 26, 2003, Renault signed Europe, moving into new rose 38.8% to 11,357 in a fast five years. To this end, it will be a memorandum of understanding automobile markets. In 2003, expanding market. Growth is investing €230 million to make with the Moroccan government important agreements paved running at an average annual and market the X90 in the country, for the acquisition of a further the way for the launch of X90, rate of 10%, with vehicles under starting in mid-2005. 38% interest in Somaca (Société a car specifically designed to $10,000 accounting for over 80% Renault’s medium-target is to Marocaine de Construction win over customers on these of the total. sell 60,000 imported and locally Automobile), raising its total markets. Favorable trends in the economic, assembled cars a year. interest to 46%. Under a second regulatory and political environment agreement, Somaca is also to assemble the L90, the three-box version of X90, from the end of 2005. Output is expected to reach 30,000 a year, with half going to export markets. In 2003, Renault sold 8,348 cars in Morocco, representing 16.7% of the market.

Colombia: expanding commercial and industrial presence The Colombian market continued the recovery begun in the previous year. Renault benefited with sales up 13.8% to 16,950 cars compared with 15,515 in 2002. We have a long-standing presence in the country, where Sofasa, in which Renault acquired a majority interest (60%) in 2003, has assembled cars including Twingo, the Clio sedan and hatchback and the Mégane sedan since 1970. The number-two manufacturer in Colombia, Renault plans to step up its operations with Sofasa, which will be assembling X90s for Latin American markets from end-2005 on.

The L90 will be assembled by Sofasa in Colombia.

38 Building a global group Renault in 2003 Iran: a highly promising market automobile manufacturers: Iran Car ownership is particularly low Khodro, the largest manufacturer in in Iran, vehicles are generally old the Middle East, and SAIPA. and the population is young, which From 2006 on, Iran Khodro and means the market combines the SAIPA plants will be turning out key factors for strong growth. vehicles under license using the On October 27, 2003, Renault X90 platform. Initial capacity of Chairman and C.E.O. Louis each will be 100,000 units a year. Schweitzer and Reza Veyseh, Assembly will involve both Chairman and C.E.O. of IDRO, the imported parts and components Iranian public body in charge of supplied locally by the joint the automobile industry, signed venture, which will thus operate a framework agreement for the as a full-fledged automobile production and sale of the X90. manufacturer. Under the agreement, which is to Iran Khodro and SAIPA will be finalized in mid-2004, a joint distribute the cars through their company is to be set up in which networks. Renault will hold a 51% interest. A second assembly plant could be The remaining 49% will be owned set up through the joint company by AID Co, in turn jointly owned if the development of the Iranian by IDRO and Iran’s two main market warrants this. The agreement signed on October 27, 2003 opens the way for expansion in Iran.

Renault, largest shareholder in the AB Volvo group

In 2003, Renault got the full benefit Mack and Renault Trucks brands. AB operating margin for the first nine of the strategic agreement signed Volvo’s operations also include buses, months of 2003 double that recorded with AB Volvo in July 2000. Renault marine engines, construction industry full year in 2002. Through its interest is AB Volvo’s largest shareholder equipment, aerospace components and in AB Volvo, Renault maintains with a 20% equity stake. The group financial services. In 2003, the group a presence in the truck sector, at is the world’s number-two maker of continued its development, posting the same time enjoying significant trucks, which it sells under the Volvo, a sharp rise in financial results, with financial benefits.

Renault in 2003 Building a global group 39 3 Building a global group

Formula 1: world class competition

Renault’s strong performance in Formula 1—a sport tracked by media around the globe— is a powerful catalyst for international development of the brand

■ Malaysia: Alonso 3rd The Renault F1 Team made podium finishes in five races, Team Chairman Patrick Faure is ■ Brazil: Alonso 3rd progress throughout the 2003 including a victory for Fernando targeting a top-three place in the ■ Spain: Alonso 2nd season, gaining momentum to Alonso in Hungary—more than championship for constructors. ■ Germany: Trulli 3rd score points in all Grand Prix events meeting its objectives. This augurs ■ Hungary: Alonso 1st except one. The team scored well for 2004, when Renault F1 ■ 88 points

Fernando Alonso “Moving ahead with the Renault F1 team” from an interview published in monthly house magazine Global (March 2003)

How difficult was it to switch in go-kart racing and I did fairly well. Of course, I know what I can do, but from test to Grand Prix racing? I like the idea of direct competition I don’t make a big thing out of it. There are more people and there is where conditions are the same for My aim is simple — moving ahead more organization. More at stake everyone [Fernando Alonso drove in with the Renault team. And going as and more media attention, too. go-kart races for ten years]. far as we possibly can. But most importantly, more Some people see you as the new How do you get on with Jarno Trulli? opportunity to progress. star. Does that affect the way you Like a house on fire. He is someone What do you think of the new go about things? special. It could be that we share a organization in Formula 1? I am just a racing driver who has a Latin temperament. Whatever it is, I’m happy with it. Especially the chance to take advantage of a rare we have no trouble understanding qualifying format. I was used to that opportunity with a big team. That’s it. each other, on or off the track.

40 Building a global group Renault in 2003 Renault — an undisputed place among the top four F1 teams Patrick Faure Chairman, Renault F1 Team

What would you say about the more often in the countries we are 2003 season? targeting. Venues for 2004 include We finished on the podium in five China and Bahrain, and in 2005 there Grands Prix, and we scored points will be a Grand Prix in Turkey. in every race except one—which In addition, F1 is a powerful source means that we more than achieved of motivation not only within the our goals. Of course, the biggest thrill company, but also for the distribution was winning the Hungarian Grand network, suppliers and even our Prix with a 100% Renault car driven customers. There is a feeling of pride by Fernando Alonso, a talent we when Renault scores a success. identified only four years ago. Today What does Renault hope to Renault has won an undisputed place achieve in 2004? among the top four F1 teams. We are targeting a top-three place in Concretely, what does Formula 1 the championship for constructors— do for Renault? which is an ambitious objective over Renault Chairman Louis Schweitzer 18 races. At the end of the season took the decision to come back to we have to be well up the rankings Formula 1 racing on the basis of its and ready to win the championship implications for Renault’s objective in 2005. of selling four million cars a year And, along with Flavio Briatore, by 2010. To achieve that sort of we are keen to emphasize what volume, we have to look beyond distinguishes the Renault F1 Team our traditional markets and identify from the cold, high-tech image opportunities in regions including embraced by other teams. Our aim Asia, Africa and the Middle East. The is to bring Renault’s core values profile of Formula 1 and the attention into Formula One racing. And to it attracts make it an ideal vector develop awareness of our brand, for geographical expansion. This communications will keep pace with is especially true as races are now our victories on the track.

Renault F1 Team turned in a highly promising performance in 2003.

Renault in 2003 Building a global group 41 Operating worldwide, Renault makes an active contribution to quality of life at local level. One example: the Safety for All program for children aged seven up.

42 Renault in 2003 4 Values underpinning growth

Renault’s strategy for profi table growth is rooted in a corporate culture and strong core values. By nature aiming for the longer term, this strategy cannot succeed if it is not applied responsibly, which means with respect for people and the environment. This responsibility is central to Renault values, illustrated by dedication to the highest standards of safety, demanding environmental policies and continuing initiatives to benefi t the community at large.

Renault in 2003 43 4 Values underpinning growth Safety: a fundamental commitment

An integrated approach

Renault has made safety an Renault’s commitment to safety integrates four inseparable concerns: preventing risk, correcting difficulties, essential priority for over protecting vehicle occupants and educating drivers. thirty years. Today, five of our models have won top five-star ■ Prevention: Renault vehicles are ■ Correction: In difficult or ■ Protection: In 2003, Renault’s ratings in Euro NCAP crash designed to keep potential risk to emergency conditions, the driving investments in passive safety tests, and Renault is a recogni- a minimum. They are recognized aids fitted to Renault vehicles came to €100 million. A zed standard setter for safety. for exemplary handling and road (ABS, emergency brake assist, ESP) longstanding commitment in this In this, concerns go beyond holding, and are considered correct any driving errors, without area is reflected in the fact that product features to include benchmarks in braking and ever becoming a substitute for the five Renault models have won driver education, responsibi- ergonomics. driver. top five-star ratings in Euro NCAP lity and awareness of safety crash tests. A stiff structure issues. keeps the cabin intact while occupant restraint systems limit the load applied and, by the same token, the danger of injury. Building staff support for safety ■ Education: Renault is committed to raising motorists’ awareness June 2003 was Road Safety month Driver’s Charter accompanied by a of the risks of driving. Renault for Renault staff in all countries, letter from Louis Schweitzer was then is also behind a Europe-wide calling on each individual to become personally addressed to each staff program for schoolchildren aged a road-safety ambassador. Launching member. Special displays and events from seven up, helping to make the program, on June 5 Renault were organized to raise road-safety the drivers of tomorrow more Chairman Louis Schweitzer and awareness at all sites in France aware of their responsibilities. French Transport Minister Gilles de and other countries. Altogether, In addition, the Kids on the Road Robien signed an agreement for 30 countries were involved in kit developed by Renault for partnership in road safety. Renault the program, which put special distribution to primary school gave a three-year undertaking to emphasis on bad driving behavior teachers, has so far provided participate in efforts to encourage to be avoided. Initiatives continued nearly five million children with safe driving and to market vehicles throughout the rest of the year, French Transport Minister Gilles de Robien an average of six hours of road with high standards of safety underscoring the importance of new and Renault C.E.O. Louis Schweitzer. safety education. equipment. A copy of the Renault attitudes on the road.

New safety-awareness initiatives for young people

As part of Renault’s policy of Kids for Road Safety. raising youngsters’ awareness of In 2004, the program will be safety on the road, nearly 3,000 extended to secondary school primary school classes—65,000 students aged 12 to 15 under pupils in nine countries—took the name Express Yourself. This part in our third international Europe-wide initiative is a further Safety for All competition. In 2002- illustration of Renault’s integrated 2003, participants developed and approach to safety. presented their ideas on the theme Express Yourself posters raise teenagers’ awareness of road safety.

44 Values underpinning growth Renault in 2003 Five cars in the Renault line-up have won Euro NCAP’s top 5-star rating.

The same level of safety throughout the range

Jacques Faure Passive Safety Technology for continued manager Top marks for safety progress

Regarding safety, what were the How can passive safety be further highlights of 2003 for Renault? improved? Following the examples of Laguna II, Scénic II showcases Renault’s The Scénic II and Espace IV MPVs By offering the same level of safety Mégane II and Vel Satis, Espace latest progress in passive safety. both won top five-star ratings in Euro throughout the range. Obviously IV and Scénic II have won five-star Designed using new types of steel, NCAP crash tests, so Renault now that is no easy task, considering the ratings in Euro NCAP crash tests. the body responds to impacts in a has five models with this distinction. economic and design constraints for Espace IV achieved a record 35.11 way that protects the cabin from That makes it a clear leader in smaller cars. But we have already points out of a possible 37, making any intrusion. A larger A-pillar, passive safety. come a good way down that road. It’s it the safest car on the road in any stiff B-pillar and fuel tank housed also worth noting that our concerns category. Scénic II is the first car in a deformation-protected zone What explains this strong are not limited to Euro NCAP crash in the C segment to top the 34 all contribute to this programmed performance? tests, since we are working on mark, coming in with 34.12 points, deformation and anti-intrusion Most of all it’s a matter of dedication. a number of subjects which that as well as the only compact MPV strategy. Scénic also features the Road safety is an integral part of organization does not take into to win a five-star rating from Euro third-generation Renault System Renault’s commitment to good account. They include safety in rear NCAP. In the frontal collision test, for Restraint and Protection, which corporate citizenship and sustainable seating and adaptation of restraint it scored 15.12 points out of a has equipped all vehicles since development. Our achievements in to the severity of impacts and the possible 16, the best score for a Laguna II. This includes airbags this area reward the contributions of bodyweight of occupants. We are car of any type. with two inflation levels, safety all sectors of the company. Naturally, also working to improve the crash belts with dual pretensioners, and an important part of this is close compatibility of vehicles. And of load limiters—400kg in the front tracking of accidents on the basis course we pay a lot of attention to and 600kg in the rear. All of Scénic of analyses by the Laboratory for driver behavior and responsibility. In II’s safety features are designed to Accident Research and Biomechanics this area, a significant development ensure the same optimal level of so that we can see how effective is that cruise control/speed limiters protection to every occupant, all our equipment really is in real-life are becoming increasingly common the more impressive in that they situations. as standard equipment or as an cover a wider array of impacts than option. We are constantly working those measured by the Euro NCAP on systems to help drivers, but not to crash tests. take over from them—they always have the final say.

Renault in 2003 Values underpinning growth 45 4 Values underpinning growth Human Resources: harnessing talent for a winning strategy

Recruiting the best

Internationalization of the Human resource planning at coming ten years. In 2003, over 2000, over 21,000 people have Group and the momentum of Renault is based on a group-wide 5,000 people were recruited joined the Group, providing support the Alliance with Nissan mean approach aimed at identifying worldwide, including 1,965 by for growth and lowering the rapid and far-reaching changes and building the skills needed to Renault s.a.s. as part of a general average age of the workforce. This in organization and the way we implement strategies over the drive to renew competencies. Since trend should continue in 2004. go about our business. Which makes the men and women at Renault more crucial to success than ever. By the same token, performance and long- term growth hinge on effective human resource policies. At Renault, these center on anticipating future needs, attracting and motivating talent, and sharing information.

Jean-Michel Kerebel, Vice President, Central Human Resources: Working together is the key to dynamic HR management.

Backing international expansion Career-long training

Renault human-resource polices the total (9% in 1999). Similarly, Training is essential to meet the place special emphasis on languages and cross-cultural challenges of change, enabling the inter-cultural understanding and themes are a focus of training. men and women within the group staff motivation to underpin Renault has implemented a to continually renew skills. Renault international growth and the company-wide training program to thus makes it a major priority, as development of the Alliance with upgrade the English language skills illustrated by the fact that three out Nissan. In 2003, international of managerial staff. of every four staff members receive recruitment accounted for 23% of training each year.

46 Values underpinning growth Renault in 2003 Career planning for motivation and success

Renault offers diversified are encouraged to consider career options to motivate staff opportunities in different with attractive opportunities countries or different business and at the same time develop divisions. To help them, all the competencies it needs to vacancies throughout the Group succeed. Wherever possible, are posted on a single intranet vacancies are filled in-house site, Job@ccess to Renault, rather than through outside accessible in 34 countries and recruitment, and staff members actively used in 22.

Employee share ownership

On July 28, 2003, the French State announced the sale of 29.6 million Renault shares to institutional investors. As required under French law, 10% of the shares for sale were offered to Group employees and Management training is a priority at Renault, honing skills and performance. former employees. All told, 43,300 employees, retirees and other former employees subscribed to the offer, open from December 6 to December 12, acquiring 2.59 million shares for €102 million.

Information flows Developing management expertise

Renault keeps staff members up to On April 4, all trade unions signed To ensure high standards of 2003. The development of special date on company news, strategy a new agreement concerning management practice, Renault courses for managers continues and goals in all areas through a the Group Works Council, the provides both individual support and in Spain, Korea, Romania and the range of publications and the Group single organization for employee corporate training programs, which Mercosur countries, as well as intranet. It also conducts two representation at Group level. In benefited 3,100 staff members in within different group departments. international surveys each year to the agreement, Renault renewed assess perceptions of the company its commitment to implementation with employees around the world of the ILO Declaration on in areas that include image, Fundamental Principles and Well-being at the workplace management, working conditions Rights at Work. This Declaration and labor relations. concerns in particular freedom of On the last point, Renault’s aim association, the effective abolition Employee health and working quality certification. In 2003, road- is to establish permanent ties for of child labor and the elimination of conditions are priorities for safety issues, particularly those responsible, quality dialogue. forced labor. Renault, which seeks to make affecting staff, were a special improvements wherever possible. concern, in line with the official To assess results, 39 sites have undertakings on road safety given by been audited, with five winning Renault during the year.

Renault in 2003 Values underpinning growth 47 4 Values underpinning growth Human Resources: harnessing talent for a winning strategy

Michel Competencies: the key de Virville to competitiveness Corporate Secretary General, Executive Vice President, Group Why manage functional expertise? Human Resources The automobile industry is extremely complex, calling on many different How do they go about that? functions and areas of expertise. Generally speaking, they take a cross- And each of these functions is itself functional approach, since each function profoundly product-based—you is present in different sectors and are not just a lawyer, you are an entities. Naturally the expertise needed automobile-industry lawyer. Managing in a given profession changes over time, the complexities of the automobile and they have to be able to plan for that. also means managing the teams that Finally, they have to think strategically, design, develop, manufacture and sell and decide whether Renault needs to it. Which means the ability to manage have full control of a competency or competencies effectively, and make should outsource it to a greater or lesser this an important form of know-how degree. Once they are clear about all in its own right. It plays a decisive role that, they assess the skills available in setting an automobile manufacturer in functional departments within the apart from its rivals, by the same company and see how far these match token making a key contribution to its or fall short of needs. competitiveness. With an eye on the future? Renault aims to manage Yes, which is what makes it so competencies in a ten-year difficult. All too often, organizations horizon. Could you explain that? adapt themselves to the skills actually Acquiring skills takes time. For available. To see the gaps, you have example, you can’t put new recruits to look ahead, and above all not try to straight into key positions in perpetuate the current way of doing engineering—they have to get used things. to the business, build contacts and What action does Renault take to get a good understanding of how the consolidate competencies? engineering system works. People Training programs are a special build up their knowledge step by step priority, as is recruitment, as well during their careers. And if a business as partnerships outside the Group. does not anticipate future needs and Another important way to help people identify potential shortfalls, it will learn is to give them opportunities to find it impossible to make up for the work in several different parts of the time lost. business, as part of their career path. How do you anticipate future What was achieved in this area in needs? 2003 and what are your aims for the Only the people in each function can year ahead? do that. Which is why, nearly two Last year was important because I years ago, Louis Schweitzer appointed think the significance of competency 56 competency managers covering all management was fully recognized. In company functions. These managers 2004, we will be working to achieve are there to ensure that Renault concrete results in all the areas has all the skills it needs and that concerned. Competency management these are on a higher level than our is at its best when it leads to rapid

Dexterity classes at the Douai plant (Northern France). competitors’. adoption of effective action plans.

48 Values underpinning growth Renault in 2003 Automobiles: a stake in the environment

The product life cycle On the road

The environmental impact of each In keeping with the terms of another plus, as illustrated by Clio Meeting environmental stage in the vehicle’s life, and that the Kyoto Agreement, European and Mégane models powered standards is already a crucial of each technology used, must manufacturers are making a with the 1.5dCi engine, which issue, and its importance is be factored into design. To take major drive to cut C02 emissions already shows emission levels growing. Renault integrates an example, the plastic fenders per kilometer to an average of below the 140g limit. Looking environmental responsibility used on Renault cars are lighter 140g or less for new cars sold ahead, Renault’s main focus into every stage of the product than the equivalent made out of from 2008 on. This represents a is on reducing emissions from life cycle. sheet metal, thus reducing fuel reduction of 25% from average conventional engines, in particular consumption and, by the same emissions in 1995. Renault by reducing vehicle weight, and token, CO2 emissions. is well placed to achieve this the development of alternative goal with its lineup of low- sources of energy. Another goal is

consumption—and thus low CO2 to lengthen the periods between emission—engines. Acknowledged routine maintenance, which is expertise in diesel engines is another way to reduce waste.

Production

Renault applies the same environmental policies wherever it operates and 28 of our plants—accounting for over 90% of output—are already certified under ISO 14001. Renault Samsung Motors recently obtained certification and the Dacia plant should follow suit in 2004. Separately, Slovenia’s Environmental Development Fund awarded Renault’s Novo Mesto site its prize for the company best respecting the environment. Policies also encompass suppliers, which play an essential role in production. In this area, Renault offers a broad range of training and, in the case of smaller companies, takes the initiative to keep them up to date on regulatory changes and advise them on The same high environmental standards are applied at all sites—here at Bursa, Turkey. desirable technological changes.

Renault in 2003 Values underpinning growth 49 4 Values underpinning growth Automobiles: a stake in the environment

Recycling

Since 1991, Renault has had a of their components—and thus to front wraparound bumper, made specialized Recycling Department apply the Directive’s prohibition on entirely from recycled materials, charged with developing ways the use of heavy metals including provides a telling illustration, since to dismantle end-of-life vehicles lead, cadmium and chromium 6. a whole new recycling chain had (ELVs). In this area, 2003 marked Information technology also plays to be developed. This economic a watershed as the Directive on its part, with Renault and Nissan’s success was also the reward Management of ELVs came into shared software package Opera for a technological feat, since it force throughout the European routing information on recycling involved making a safety-critical Union. Renault makes an active processes to development part from recycled materials contribution to recycling in all engineers. The economics of without deterioration of physical parts of Europe and has worked in recycling are not forgotten and properties—as Mégane II has close cooperation with suppliers to are taken on board from the shown with its five-star rating in establish the detailed composition design stage. The Mégane II’s Euro NCAP crash tests.

Parts made from recycled plastic

Parts made from recyclable material

1. Roof stiffener 2. Front end deflectors 3. Skidplate under engine 4. Upper member cover 5. Battery protector 6. Wheel arch lining 7. Noise insulation 8. Leather trim (Privilège) 9. Airbag computer protection 10. Under seat stowage drawers 11. Inserts 12. Floor sound insulation 13. Suspension fairing 14. Boot side trim 15. Carpet 16. Rear lamp clusters 17. Roof stiffener

Looking ahead: today recycling is seen as a necessity, and built into new models from the design stage. Virtually all of the Mégane Scénic II can be recycled—a total 95% by weight.

50 Values underpinning growth Renault in 2003 Clio 1.5 liter dCi: less than 120g of CO2 per km.

Environmental master plan for a model plant Martine Martin Environmental manager, You use what you call an reconciling the site’s environmental Cléon powertrain environmental master plan. Could targets with the technical and financial plant you explain what that means? constraints of the project. Well, we start out with a full What are your main aims for the examination of the site. Then we new production workshop for the packaging. We have also asked draw up a master plan defining the Alliance’s engine? suppliers of machines not to specify targets for the next ten years. These Above all, zero waste released into different oils for new tooling. New concern environmental impact on the water—the big challenge for a equipment, in particular test benches, air, water and the ground, as well as powertrain plant. Water used to cool must not generate excessive noise. noise. They also concern the control machines will be in a closed circuit And we are working on ways to cut

of risks such as fire, flooding and and not let out into the environment. SO2 and NOx emissions. explosions. Machining and cleaning fluids will be Is only the Cleon plant How did you go about it at the treated in an evaporator immediately concerned? Cléon plant? instead of being pumped to the Definitely not. All the Group’s The plan was prepared in connection facility’s waste-processing unit. powertrain plants are moving in the with the Alliance’s M1D engine What are the other targets in the same direction. Sites at Curitiba project. In mid-2002, when the master plan? in Brazil and Seville in Spain, for project was in the development Sorting of waste at source will example have already achieved the phase, we drew up a contract continue, as will efforts to reduce zero-waste target.

Renault in 2003 Values underpinning growth 51 4 Values underpinning growth

Community initiatives

Knowledge to serve the community International programs

In all areas of our business and Renault actively supports the greater efficiency in an education Renault is an active participant in in society as a whole, Renault cause of education and culture in system based on mutual respect a large number of study groups, puts people first, a fundamental many countries through initiatives and a sense of responsibility, associations and programs in value underpinning our that yield concrete benefits. countering the rise in violence and fields relating to the social and commitment to responsible An exemplary illustration is the crime. The program also offers environmental implications of corporate citizenship. This Valued Citizens program in South job opportunities for unemployed sustainable development—in takes concrete form through Africa, for which Renault became young people to act as mediators. France, across Europe and at local initiatives in countries the leading partner in 2003. The The Valued Citizens program international level. around the world plus support program aims to foster civic is currently in operation at 335 This includes membership of the for international organizations, sense among school children and schools in Gauteng and Freestate United Nations Global Compact with special emphasis on encourage teachers to put the Provinces, benefiting some 32,500 network, entailing a commitment education, culture and mobility. principles of democracy to work youngsters under the guidance to the Compact’s nine principles for in the classroom. Civic sense in of 500 teachers. In 2004, it will human rights, labor standards and turn contributes to the realization be extended to junior secondary the environment. of simple, yet fundamentally schools with the continuing support important goals that include of Renault.

Community action: Safety for All brings the message home.

52 Values underpinning growth Renault in 2003 The nine Global Compact principles

1. Businesses should support Businesses are to work for: Responsibilities to our environment: and respect the protection of 4. The elimination of all forms of 7. Businesses should support internationally proclaimed human forced and compulsory labor. a precautionary approach to rights. 5. The effective abolition of child environmental challenges. 2. They should make sure that they labor. 8. Businesses should undertake are not complicit in human rights initiatives to promote greater abuses. They must also: environmental responsibility. 3. Businesses should uphold the 6. Eliminate discrimination in respect 9. Businesses should encourage freedom of association and the of employment and occupation. the development and diffusion effective recognition of the right of environmentally friendly to collective bargaining. technologies.

Mobility and sustainability

People everywhere want to be able France: International: to move around freely, safely and, ■ Support for car-sharing programs ■ Program for sustainable mobility at acceptable cost, to communicate, ■ SARRASIN program for mobility in 2030 under the aegis of the meet and do business. It is in rural areas, in partnership with World Business Council for important to find ways for them French transport company Kéolis Sustainable Development. to do this that also respect in the Abbeville area in Northern ■ Clean Air project for Rio de essential social and environmental France. Janeiro. values—for the present and for ■ Predit 3, France’s national the future. Here Renault’s policies program for research and are rooted in our commitment to innovation in land transport. sustainable development, with priorities that include reducing Europe: the environmental impact of ■ TRASCOM—Traveler Assistance the automobile, development of for Combined Mobility in Regional innovative transport services and Areas—research program. participation in public debate on ■ Freight Delivery Rationalization sustainable mobility policies as well in Cities, Smooth Traffic and Safe as related initiatives. Map projects within the framework Examples of action involving of EUCAR, the European Council Renault are given below. for Automotive R&D.

Renault in 2003 Values underpinning growth 53 10h17 École à Viry-Chatillon, France

Scénic II is a lynchpin of the Mégane program, illustrating Renault’s product, production and business choices for the years ahead.

54 Renault in 2003 5 Building for proven success

Financial results are the proof of business success. Renault’s performance in 2003 and prospects for 2004 offer a sound basis for the pursuit of our strategy for profi table growth.

Renault in 2003 55 5 Building for proven success Renault posts record net income in 2003

Revenues up 3.8%

Revenues by Division Despite a sluggish environment in Europe, with prices in Europe. The success of new models (€ million) the automobile market declining and the euro including the Mégane II Hatch, Scénic II and on the rise, particularly against sterling, Renault Espace IV made an important contribution, as 2002 2003 % change achieved a 3.8% increase in revenues*. This did steady growth for diesel-powered vehicles, restated (1) published 2003 / 2002 reflects both the success of our ranges and the gains on international markets and increased Automobile 34,274 35,535 + 3.7 benefits of our strategy of international develo- sales of components, particularly to Nissan. pment. ■ Revenues from the Sales Financing Division Sales Financing 1,893 1,990 + 5.1 ■ Revenues of the Automobile Division rose rose 5.1% to €2 billion, rewarding the mark- 3.7% to €35.5 billion despite the adverse eting performance of RCI Banque. Total 36,167 37,525 + 3.8 impact of exchange rates, which cut the figure (1) 2002 data restated on a consistent basis with 2003 by 2.1%. Sales performances benefited from * on a consistent basis. (revenues published in 2002: €36,336 million). an improved product mix and higher vehicle

Operating margin rebounds in the second half

Operating margin by Division Operating margin for the year came to €1,402 Europe was steady as sales recovered in Turkey (€ million) million, representing 3.7% of revenues compa- and losses in the Mercosur countries leveled red with 4.1% in 2002. Trends during the year off, offsetting a decline in the contribution from were uneven, with operating margin picking up Renault Samsung Motors, hit by the contraction Automobile 1,189 1,035 from 3.2% in the first half to 4.3% in the second. of the Korean market and a fall in the won. Sales Financing 273 294 367 In the Automobile Division the increase resulted The sales financing activity showed healthy Total 473 1,483 1,402 not only from growth in sales but also from growth and its contribution to operating margin continued cost reduction, tighter control of rose €73 million from €294 million in 2002 to % of revenues 1.3 4.1 3.7 general costs and increased industrial efficiency. €367 million in 2003. (1) Data restated to reflect change in presentation by division. The contribution of business outside Western

Net income reaches new record

Summary income statement Main items following operating €1,335 million in the previous (€ million) margin include: year as a result of continued ear- 2001 2002 2003 ■ a €168 million net charge under nings growth Other operating income and ■ a tax charge of €510 million, Revenues 36,351 36,336 37,525 expenses, compared with €266 compared with €447 million in Operating margin 473 1,483 1,402 million in the previous year. This 2002. Other operating income and expenses 231 (266) (168) reflected in particular costs for Operating income 704 1,217 1,234 the early retirement scheme Net income thus reached a record Financial expense (64) (91) (71) for older employees and the €2,480 million, up from €1,956 Share in net income of Nissan Motor 497 1,335 1,705 proceeds of property sales in an million in 2002. This set earnings amount of €112 million per share at €9.32, up from €7.53 Pre-tax income 1,020 2,457 3,023 ■ a €1,705 million contribution in 2002. Taxes (67) (447) (510) from Nissan Motor, up from Net income 1,051 1,956 2,480 Earnings per share (in euros) 4.38 7.53 9.32

56 Building for proven success Renault in 2003 Further consolidation of financial structure

Against this backdrop, Renault continued conso- Net financial debt Return on equity lidation of its financial base in 2003. of the Automobile Division (€ million) (%) ■ Net financial indebtedness of the Automobile Division declined €747 million 5,000 22.3 to €1,748 million at December 31, 2003. This 20 19.8 4,000 reflected robust operating conditions and 3,927 15 lower investment, in turn the result of more 3,000 11.7 2,495 10 selective policies and a favorable phase in the 2,000 product cycle. 1,748 1,000 5 ■ Shareholders’ equity rose €1.8 billion to €13.6 billion at December 31, 2003. 0 0 2001 2002 2003 2001 2002 2003 At that date, net financial indebtedness of the Automobile Division was down to 12.9% of group shareholders’ equity, compared with The net return on equity for the year was 22.3%, 21.1% a year earlier. in line with the Group’s target of 11% or better.

Forging lasting ties to shareholders

Renault shareholders at December 31, 2003 Dividend rises by over 20% Dividend per share In the second half of 2003, the French govern- In line with Renault’s policy of regular increases (€) ment further reduced its interest in Renault, in dividends, the Annual General Meeting to be 1.40(1) selling shares representing some 10% of equity held on April 30, 2004 will be asked to approve 1.4 to institutional investors from France and other the payment of a dividend amounting to €1.40 1.2 1.15 countries as well as to employees and former per share on May 17, 2004. Distributed earn- 1.0 0.92 employees of some Group companies. The ings will thus represent 16.1% of net income 0.8 government’s interest thus fell from 25.9% at for 2003. 0.6 December 31, 2002 to 15.7% a year later. 0.4 Float represents 61.2% of equity, of which some Shareholder communications—keeping 0.2 36% is held by foreign institutions, 19% by the lines open 0 French institutions and 6% by individual share- Renault is actively committed to maintaining 2001 2002 2003 holders. close ties to shareholders and providing a (1) Subject to decision of Annual General Meeting on April 30, 2004. steady flow of quality information. In addition to a growing number of publications, this is 4.1% illustrated by the shareholder section on the Employees renault.com website and a host of meetings and Payout (%) 4.0% 15.7% other events in France and other countries. Treasury stock (1) French government The Renault shareholder club set up in 1995 now 25 counts some 10,000 members and since 1996 21.2 20 Renault has also had a Shareholders’ Advisory 16.8 16.1 Committee. Services for individual shareholders 15 include a toll-free information line (0 800 650 10 650 in France) and a dedicated e-mail connection ([email protected]). 5 61.2% 15% 0 Public Nissan 2001 2002 2003

(1) Shares acquired for stock option programs.

Renault in 2003 Building for proven success 57 5 Building for proven success

Looking ahead

Finance Products

Renault expects the automobile Two major events are scheduled The second big event, also at the market in 2004 to edge upwards in for 2004 as Renault continues the end of the year, will be the rollout Europe and increase slightly in the renewal of its product line. of the first X90 model. Based on main countries in which the group an entirely new approach to meet operates outside Europe. At the end of the year, a new the specific needs of new markets, model, foreshadowed by the the development of this model has Amid sluggish markets, Renault Modus show car unveiled at the drawn on the technical expertise will benefit from a Mégane family 2004 Geneva Motor Show, will of Renault and the competitive- at full strength as well as from be joining Twingo and Clio to ness of Dacia’s production base. heightened competitiveness, pri- reinforce Renault’s presence on Modern and attractively designed, marily as a result of cooperative the small-car segment. This new it will not only be highly affordable ventures within the Alliance. In concept combines stylish design but also offer quality matching addition, Renault will pursue its with an innovative interior that international standards, as well international development and will ensures outstanding roominess for as a spacious interior and a robust be looking to grow volumes outside a car of its size. structure to deal with the tough Western Europe. conditions on some target mar- kets. This new model is central to Overall, assuming no significant the Renault group’s international changes in major exchange rates strategy and plans for expansion compared to the current situation, on emerging markets. the group has set itself the objec- tive of achieving operating margin of around 4.5% of revenues in 2004. Renault also anticipates a further increase in net earnings.

Text approved by the Board of Directors on February 9, 2004.

58 Building for proven success Renault in 2003 Modus: a new response to new expectations

Wind: the roadster according to Renault

Renault in 2003 Building for proven success 59 Photos credits:

Bernard Asset: highlights, Frédéric Atlan: p. 21 O. Banet: pp. 22-23, Anthony Bernier: highlights, pp. 23, 59, Stéphane de Bourgies: p. 45, P.D. Casteran: p. 22, Frédéric Christophoridès: pp. 26-27, 39, Patrick Curtet: pp. 18, 51, 59, C. Cugny: p. 22 Dacia photo library: p. 23, Benoît Decout (Rea): pp. 32-33, 35, 49, Hervé Desdemaines (Studio Pons): pp. 20, 42-43, 52, Dingo: highlights, pp. 16-17, 37, D. Dumas: pp. 22-23, Getty Images: front cover, Eddy Guilloux: highlights, p. 13, Carl de Keyser (Magnum): pp. 14-15, 45, Lat Photographic: pp. 40, 41, A. Lesieur: p. 22, Ludovic/Rea: p. 5, Romuald Meigneux (Sipa Presse): p. 3, Rens van Mierlo: pp. 4-5, 6-7, 8, Sébastien Millier: front cover, Luc Perenom: pp. 48, Philippe Pons (Studio Pons): pp. 29, 46, 47, 48, Renault Trucks DR: p. 39, RSM photo library: pp. 23, 36, Patrick Sautelet: pp. 12, 19, Philippe Stroppa (Studio Pons): pp. 9, 24-25, Studio Pons: p. 44, Christelle Viviant: p. 31, Michel de Vries: pp. highlights, 10-11, 54-55.