Financial discipline and innovations to relaunch Renault

Luca de Meo relies on upgrading and technology.

Additional cost reductions, focus on electricity and on new more profitable mobility services: all the ingredients have been put together by Renault’s new CEO, Luca de Meo, and his team to reassure investors, employees and more largely the economic world on the future of Renault.

On the “flashy” scene of a television studio, Luca de Meo recalled his diagnosis last September. Cut out for significant growth in volumes, Renault ended up with a ” motor too heavy to climb a winding circuit », Summarized the Italian leader, who arrived on 1is July at the head of the group. In the first half of 2020, the French group posted a record loss of 7.3 billion euros. And the results for the whole of 2020 do not look good, the global sales of the manufacturer having fallen by 21.3%.

Renault has been on a diet for at least five years, if not more. The group will sell less, better and more expensive. Its factories will see their capacity reduced. From 4 million units in 2019, they will drop to 3.1 million per year by 2025. Cost reduction efforts will be stepped up. The plan to save 2 billion euros on fixed costs by the end of 2022, launched last year, increases to 2.5 billion by 2023 and 3 billion by 2025. Without increasing the number of job cuts already announced in 2020: 15,000 worldwide, including 4,600 in France.

Launch of a new brand

The new Renault intends to lower its breakeven point – the threshold from which it becomes profitable – by 30% by 2023. It will also increase its margins by accelerating the transition in favor of electric power and moving upmarket. The manufacturer is refocusing around four better differentiated brands: Renault, modern and more techno, Dacia, robust and accessible, Alpine, sporty and avant-garde. A new brand, Mobilize, is dedicated to services and new forms of mobility. This organization around four brands should improve the group’s efficiency.

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The company has also completely revised its range. By 2025, the C segment (that of the Mégane for example), the most profitable, should represent 40% of the group’s margins, against 15% in 2019. This move upmarket will be gradual. The group is targeting an operating margin of 3% by 2023 – against 4.8% in 2019 – and an increase to 5% by 2025. By this time, sales of electrified vehicles should become the majority: 35% of hybrid vehicles – electric and thermal – 30% of battery vehicles.

This technological change will in fact increase the average price of vehicles by 7,000 euros. To make the greatest number of people want electricity, Renault is making the nostalgic cord vibrate. He is reinventing the very popular R5 in an electric version, the launch of which will not take place before 2024. His canary yellow prototype was present on the scene.

Asked about its place of manufacture, Luca de Meo said “look for the possibility of manufacturing it in the north of France. It is a big challenge in terms of investments, of production costs. We will need the support of everyone, unions, communities, suppliers to create what could be the largest electric vehicle factory in Europe ”. Renault intends to build in Douai and Maubeuge a large “north pole” of electricity. It is also in France that Renault and the American Plug Power should install their fuel cell plant to fuel utility vehicles with hydrogen.

Circular economy

The other revolution led this time around 2030 relates to mobility services. Luca de Meo talks about energy, data, carsharing, VTC services… This new activity has been entrusted to Clotilde Delbos, deputy general manager and financial director. It is placed in the orbit of RCI Bank and Services, Renault’s financial services subsidiary. Mobilize will offer four types of vehicles – from mini-urban to small compact utility – specially designed and intended for fleet operators and motorists no longer wishing to buy vehicles. In the energy sector, Renault will recycle electric batteries and lengthen the life cycle of vehicles at its Flins plant, which is converted to the circular economy.

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Renault also intends to regain ground in new technologies. The group will welcome French start-ups and tech companies to its “Software Republic”, a giant lab in the technocentre dedicated to mobility. In 2030, Mobilize should achieve 20% of the group’s turnover.

The four representative unions unanimously approved the plan. Luca de Meo, who refers to the New Wave of French cinema can exclaim ” Action »!


Falling PSA sales

Due to the pandemic, worldwide sales of PSA, on the verge of merging with Fiat Chrysler, plummeted 27.8% in 2020, to 2.5 million vehicles. A more severe drop than that recorded by the Renault group (-21.3%) and by the global automotive market (-14.2%)

PSA volumes fell in particular in Europe (-29.7% to 2.1 million), where the group made nearly 85% of its deliveries, and in China (-57.7% to 45,965), the first global market.

On the Old Continent, the manufacturer (Peugeot, Citroën, DS, Opel, Vauxhall) notes that its sales “ have strongly recovered »In the second half of 2020, increasing by 40% compared to the first six months of the year. It also emphasizes maintaining its market share in its main territory, France.


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