Case Solution: Reanult's Logan Car
Case Solution Renault’s Logan Car: Managing Customs and Duties for a Global Production: Amanda Silverman, Prof. Hau Lee (Case: GS-62 Date: 04/29/08) Stanford Graduate School of Business) Topics: International Value Chain, Foreign Trade Related Risks & Trade Barriers
Internationalised Value Chain of Renault Logan Pitesti ROMANIA €489 Million Investment in Production site for Renault Logan
CKD Parts
CKD-parts Decree 166: 0% duty rate for ~90% of parts
Moscow, Russia investment of €230 for assembly plant
Duty Free
CBUs 0% duty rate resulting from free trade agreements
By 2006 20,000 Logans exported
Ukraine (free trade agreement)
Export
Morocco 54% stake in Assembly Plant SOMACA: €30 million invested, CAPACITY: 30, 000 Logan per year
Tunisia, Jordan, Egypt (Maghreb and Algeria) (free trade agreement)
Colombia, Envidago assembly plant investment €23mil: Capacity 15,000 by 2010
Export of cars to
Venezuela Ecuador (free trade agreement)
CKD Parts Duty Free Export
Assembly Plants in Brazil, India, Iran Mechanical parts 0% duty rate instead of 30%: Romania = EUmember
Romania now EU Member
CBUs 0% duty rate resulting from free trade agreements
Brazil: Assembly plant: Mechanical parts CBUs 0% duty (higher than expected demand form EU countries)
EU Countries, + Croatia & Turkey
The “Custom Consulting Group” is responsible for planning various aspect of the company’s global infrastructure especially logistic and administration required to satisfy customs regulations in the entire supply chain. Moreover they were also responsible for understanding the global customs environment. Inbound and outbound logistics operations and procurement were organized to add value at each step. The home base in Romania produced cars for EU countries, however the automobiles built in a given country could be produced with a range of local content also. A Logan could be exported as a “CBU (completely built-up) vehicle where the importing
Internationalised Value Chain of Renault Logan Pitesti ROMANIA €489 Million Investment in Production site for Renault Logan
CKD Parts
CKD-parts Decree 166: 0% duty rate for ~90% of parts
Moscow, Russia investment of €230 for assembly plant
Duty Free
CBUs 0% duty rate resulting from free trade agreements
By 2006 20,000 Logans exported
Ukraine (free trade agreement)
Export
Morocco 54% stake in Assembly Plant SOMACA: €30 million invested, CAPACITY: 30, 000 Logan per year
Tunisia, Jordan, Egypt (Maghreb and Algeria) (free trade agreement)
Colombia, Envidago assembly plant investment €23mil: Capacity 15,000 by 2010
Export of cars to
Venezuela Ecuador (free trade agreement)
CKD Parts Duty Free Export
Assembly Plants in Brazil, India, Iran Mechanical parts 0% duty rate instead of 30%: Romania = EUmember
Romania now EU Member
CBUs 0% duty rate resulting from free trade agreements
Brazil: Assembly plant: Mechanical parts CBUs 0% duty (higher than expected demand form EU countries)
EU Countries, + Croatia & Turkey
The “Custom Consulting Group” is responsible for planning various aspect of the company’s global infrastructure especially logistic and administration required to satisfy customs regulations in the entire supply chain. Moreover they were also responsible for understanding the global customs environment. Inbound and outbound logistics operations and procurement were organized to add value at each step. The home base in Romania produced cars for EU countries, however the automobiles built in a given country could be produced with a range of local content also. A Logan could be exported as a “CBU (completely built-up) vehicle where the importing