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BUSINESS ABROAD: Renault on the Go

5 minute read
TIME

The car that has come up fastest in the U.S. market in the past year is Renault’s Dauphine (Crown Princess). A snub-nosed 32-h.p. sedan, it is low-priced ($1,645 in Manhattan), economical (up to 43 miles per gallon), and small enough (155 inches long) to shoehorn into a small parking space. Totting up 1957 results last week, Renault announced that it sold some 24,000 Dauphines in the U.S.—v. only 500 during 1956—plus another 4,000 smaller Renaults. For 1958, Renault has boosted its U.S. export quota to 60,000 cars, hopes to move within striking distance of Germany’s front-running Volkswagen, which sold 72,000 autos and small trucks in the U.S. during 1957.

The Dauphine is already outselling Volkswagen in eleven U.S. states, including Texas. So brisk is demand that Renault and the French Line have formed a new shipping company with six freighters that ferry up to 1,060 Dauphines each across the Atlantic. To woo the U.S. buyer, Renault in just 18 months has also built a nationwide network of 16 U.S. distributors, 410 dealers.

Absolute Monarchy. The remarkable thing is that this type of freewheeling enterprise has come from a government-owned firm. But Renault (assets: $253.5 million) is a far cry from the classic nationalized company. It has never had a government loan, and the government keeps hands off, aside from examining Renault’s books once a year and tapping civil servants as its top managers. Says Renault’s President-Director General Pierre Dreyfus, 50, a scholarly doctor of law, lifelong civil servant and ten-year Renault veteran: “We operate like an absolute monarchy. I make all the decisions. We have one stockholder—the French state. The state merely judges the financial results at the end of the year. If the results are bad, the state can fire me.”

Ever since the state has been in the driver’s seat, results have been good, although Renault had to live down some unhappy history. The company was born in 1898 when brilliant Louis Renault started putting together racing cars in his mother’s backyard. When his early models won races, Renault won fame and sales. He rolled out one of the world’s first taxicabs in 1906, became a top French military producer in World War I, by 1920 was Europe’s biggest automaker.

Austere and autocratic, Louis Renault ruled his company like a barony, sacked anyone who even whispered about a labor union. In the 1930s the company boiled with Communist unrest. During the World War II occupation, the company rolled out 34,232 tanks, trucks and other vehicles for the Germans; workers who protested working conditions were shot on the spot by the Nazis. After the Liberation, ailing Louis Renault, 67, was accused by the government of collaborating with the Nazis; four weeks later he died in a private clinic. The French government confiscated his 95% interest in the company and seized the remaining 5% held by private investors (it later paid them for it).

Profit Sharing. To clean up the bitter memories and the vast destruction left by Allied bombers, the government named Engineer-Lawyer Pierre Lefaucheux as boss. He refused to accept state subsidies. “If we do,” said Lefaucheux, “the politicians will be telling us how to make door handles.” Instead, he floated bond issues on the private market, got loans from U.S. and Swiss banks, used Marshall Plan money to buy machine tools and presses in the U.S. From the rubble rose some of the most highly automated factories in Europe. Renault also became a model of enlightened management. It put in a profit-sharing plan, and was the first French company to give all workers a paid three-week vacation. In 1955 Renault routed the Communists for good by signing a contract with non-Communist unions calling for an automatic 4% wage boost every year.

After Lefaucheux was killed three years ago in an auto accident, Dreyfus, his longtime ramrodding chief of production, stepped into his job. He ordered the drive into the U.S. market, pushed output from 900 cars and trucks a day to 1,500 at present. He also steered sales from $409.6 million in 1955 to more than $500 million in 1957, including $130 million in export sales, making Renault the biggest French exporter. Of Renault’s $14 million-plus profit in 1956, the state got $6,600,000 in taxes and $2,100,000 in after-tax profits. Another $2,100,000 was carved up among the workers in profit sharing, $3,100,000 went into reserves, and $300,000 was held as cash carry-forward. Dreyfus, the biggest man in the biggest French manufacturing company, got only a civil servant’s salary: about $20,000.

Looking to the future, Dreyfus has doubled Renault’s research budget and staff. Of his 60,580 workers, 802 are research engineers, half of them busy with pure research. Renault is experimenting with a turbodiesel locomotive, and has already sold rattle-free, rubber-tired subway cars to the Paris Metro. Says President Dreyfus: “We must be regarded as something of a pilot plant that sets the pace for the rest of the nation’s economy. For the past three years we have been able to raise wages by more than 12%, while holding the price of our finished product stable. By improving our productivity and our workers’ living standards, we are helping France on her way to modernization.”

Volkswagen also turned in a happy annual report. Sales in 1957 are expected to top two billion marks (more than $476 million) for the first time. This week, as Managing Director Heinz Nordhoff celebrates his tenth anniversary on the job, Volkswagen will roll out its 2,000,000th car. Other West German automakers are also picking up speed. Production in 1957 hit 1,210,000 cars, and almost half—585,000—were exported.

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