Renault Trucks Defense (RTD) plans to open a new assembly line for the Véhicule Avant Blindé (VAB) Mk3, an upgraded version of its troop carrier aimed at export markets. (U.S. Army)
PARIS — Renault Trucks Defense (RTD) plans to open a new assembly line for the Véhicule Avant Blindé (VAB) Mk3, an upgraded version of its troop carrier aimed at export markets, which are forecast to make up at least half of the company’s annual sales by 2015, said Chief Executive Gérard Amiel.
On Oct. 25, RTD, part of the Swedish Volvo commercial trucks group, completed the 538 million Swedish krona ($79 million) acquisition of Panhard General Defense, the French maker of light armored vehicles. The Panhard acquisition is a move toward RTD’s target of making 700 million euros ($888.6 million) in annual sales by 2015 and is seen as a step toward consolidation in the French land systems industry.
RTD is part of Volvo’s government sales division, which has a target of 1 billion euros of annual sales by 2015.
The plan to add production, announced Nov. 14, is highly unusual, given the economic crisis hitting Western economies. Carmakers Renault and PSA Peugeot Citroen have seen new car sales collapse, and there is much debate over a deindustrialization of the French economy.
The new line will be at the Fourchambault site, in central France, the maintenance center for the French Army’s 4,000-strong fleet of VABs. Amiel declined to give financial details of the investment.
RTD developed the VAB Mk3 with its own funds for foreign markets. Under the company’s plan, exports will make up 50 percent to 60 percent of annual sales.
“The VAB Mk3 was developed for export,” Amiel said.
RTD had 2011 sales of 253 million euros, and Panhard had sales of 81 million euros. The combined sales of RTD’s three brands, Renault Trucks Defense, Acmat and Panhard, mean 2012 sales will be more than 400 million euros for 2012.
RTD hopes to sell the upgraded Mk3 model to the 10 countries besides France that operate the VAB, Amiel said.
The company unveiled the Mk3 model at the Eurosatory show in June. A first contract has yet to be signed, but interest was so strong that the company decided to build an initial batch of 10 vehicles in 2013. The first vehicles will be ready for delivery by the end of next year or early 2014, Amiel said. Managers have set a target of 250 vehicles in 2014 on the new line.
The new model will have a more powerful Renault 320 or 340 horsepower engine, an independent suspension and onboard information systems. The vehicle was designed for “maximum robustness and minimum sophistication,” seen as suited to countries with low technical sophistication, Amiel said.
The engineers did not design the Mk3 for the French Army, but the vehicle could work as a successor to the basic VAB, Amiel said.
RTD will use a multibrand strategy to attract foreign customers, offering a range of combat, support and security vehicles. RTD will observe the embargo of military equipment sales to Beijing, but the company hopes to sell technology and components as well as security vehicles to China.
In exports, the French company beat Italian rival Iveco for an Egyptian deal in 2012. RTD sold “significant numbers” in two versions of the Sherpa Light and MIDS police and prisoner carrier.
Competition in export markets is fierce, with rival suppliers in Turkey, Brazil and South Africa benefiting from low labor costs, Amiel said.
“100 percent made in France” helps in a domestic offer, but in international markets, “I say I belong to the Volvo group,” Amiel said.
In the national market, the government has postponed the French Army’s Scorpion program, which has delayed a tender for the Véhicule Blindé Multi-Role (VBMR), the multipurpose troop carrier and a major part of the modernization of domestic land armaments.
A competition for the VBMR was due in the last quarter of 2011, but the program will slip at least two years as the procurement office will probably wait until the defense white paper and the multiyear defense budget law are completed, Amiel said. That means a tender in the last quarter of 2013 at the earliest.
RTD has partnered with Nexter to bid for the VBMR program, along similar lines to their cooperation on the Véhicule Blindé Combat d’Infanterie, an infantry fighting vehicle.
On a possible alliance with Nexter, Amiel said talks could be reopened after 2013, once the white paper and multiyear budget had clarified the defense landscape.
The best business model is to be a military vehicle maker that is part of a commercial group, Amiel said.
RTD enjoys advantages as a subsidiary of Volvo, the world’s second-largest commercial truck maker after Mercedes, Amiel said. The mix of civil and military production means the small production run for defense orders was helped by large economies of scale in commercial vehicles, financial resources for research and development, and the long-term supply of engines, gearboxes and other equipment bought in-house, rather than depending on outside manufacturers that might cut production.
For instance, RTD bought Volvo engines for military vehicles at cost, while Nexter bought Mercedes engines at “double the cost price,” Amiel said.
In the next generation of military vehicles, RTD plans to offer hybrid engines, an increasingly common feature in the civil market.