RenaultS Logan Car: Managing Customs Duties for a Global Product
CASE: GS-62 DATE: 04/29/08
RENAULT’S LOGAN CAR: MANAGING CUSTOMS DUTIES FOR A GLOBAL PRODUCT
There are some commodities with very high levels of complexity with respect to customs duties. Because of this, we must have some specific knowledge of what duty optimization, drawbacks, specific regime, and automotive laws are. —Isabelle Roca, Customs and Trade Manager, Renault
Renault designed the Logan car to address the needs of new, high-potential markets around the world. Initially launched in 2004 in Romania, plans for the Logan called for it to be distributed throughout South America, Asia, Eastern Europe, Africa, and the Middle East. The Logan was an important part of Renault’s strategy to grow revenue and increase profitability. The initial results looked promising—by the end of 2006, the company had sold over 400,000 Logan cars. Due to the global scope of Logan’s sales, customs duties were an important consideration. Effective customs management was essential both to getting product to the customers, and to minimizing costs—and the customs landscape was constantly changing. As Isabelle Roca, Customs and Trade Manager for Renault, considered the progress of the Logan program, she knew that Renault had some very important decisions to make in 2007. In addition to selling in new global markets, the Logan had unexpectedly taken off in Europe. Romania had just entered the European Union (E.U.). The trade policies of many countries, such as Morocco and South Africa, were evolving. She wondered about the strategic importance of these countries and how Renault should proceed with its operations. As Roca considered the options, she knew that her position in the Customs Consulting Group required her to think carefully about how to minimize the global cost of customs duties.1
Interview with Isabelle Roca, February 4, 2008. Subsequent quotations are from the author’s interviews, unless otherwise noted. Amanda Silverman prepared this case under the supervision of
RENAULT’S LOGAN CAR: MANAGING CUSTOMS DUTIES FOR A GLOBAL PRODUCT
There are some commodities with very high levels of complexity with respect to customs duties. Because of this, we must have some specific knowledge of what duty optimization, drawbacks, specific regime, and automotive laws are. —Isabelle Roca, Customs and Trade Manager, Renault
Renault designed the Logan car to address the needs of new, high-potential markets around the world. Initially launched in 2004 in Romania, plans for the Logan called for it to be distributed throughout South America, Asia, Eastern Europe, Africa, and the Middle East. The Logan was an important part of Renault’s strategy to grow revenue and increase profitability. The initial results looked promising—by the end of 2006, the company had sold over 400,000 Logan cars. Due to the global scope of Logan’s sales, customs duties were an important consideration. Effective customs management was essential both to getting product to the customers, and to minimizing costs—and the customs landscape was constantly changing. As Isabelle Roca, Customs and Trade Manager for Renault, considered the progress of the Logan program, she knew that Renault had some very important decisions to make in 2007. In addition to selling in new global markets, the Logan had unexpectedly taken off in Europe. Romania had just entered the European Union (E.U.). The trade policies of many countries, such as Morocco and South Africa, were evolving. She wondered about the strategic importance of these countries and how Renault should proceed with its operations. As Roca considered the options, she knew that her position in the Customs Consulting Group required her to think carefully about how to minimize the global cost of customs duties.1
Interview with Isabelle Roca, February 4, 2008. Subsequent quotations are from the author’s interviews, unless otherwise noted. Amanda Silverman prepared this case under the supervision of