Groupe Renault unveils new strategic plan to reshape business model in China

On January 14th, Groupe Renault officially announced its "Renaulution" (Renault+revolution) strategic plan, which aims to reorient Groupe Renault's strategic focus from the pursuit of sales volume to a greater emphasis on value creation.

The "Renaulution" program shifts Renault's strategic focus from volume to value creation, and is divided into three phases, which will be launched simultaneously:

Phase 1: Resurrection. Stage 1: Resurrection, which will last until 2023, will focus on profitability and cash generation;

Stage 2: Renovation, which will see Renault's product lineup renewed and enriched by 2025 in order to improve the brand's profitability;

Stage 3: Revolution, which will see Renault's business operations renewed and enriched by 2025; and

Stage 4: Business Development, which will see Renault's business operations renewed and enriched by 2025, in order to improve the brand's profitability. 2025, Renault's business model will shift to technology, energy and mobility, which will make Renault a leader in the next-generation mobility value chain.

The Renaulution strategy will restore the Group's competitiveness by:

Taking the cost-control program one step further, by improving efficiency in R&D and manufacturing, lowering fixed costs globally, and increasing variable costs. variable costs.

Leverage the current industrial assets and electrification leadership of Groupe Renault in Europe.

Build on the Alliance to increase Groupe Renault's coverage of products, businesses and technologies.

Accelerate the promotion of mobility, energy and data-related services.

Improve profitability through four differentiated business units oriented to brands, customers and markets.

Renault will advance this strategic plan through a new organizational structure: functions with an engineering focus, accountable for the competitiveness, cost and time-to-market of the products of the different brands, and managing their profitability with well-established, clear and differentiated brands. By creating a fully functional, value-driven organization, the company will no longer measure performance in terms of market share and sales, but will instead be evaluated in terms of profitability, cash appreciation, and investment effectiveness.

In response, Groupe Renault has set new financial targets:

By 2023, the Group will have an operating margin of more than 3%, cumulative automotive operating free cash flow (2021-23) of around €3 billion, and reduce investments (R&D and capital expenditure) to a revenue share of around 8 percent.

By 2025, the Group will have an operating margin of at least 5% and cumulative automotive operating free cash flow (2021-25) of around €6 billion.

The "Renaulution" strategy will ensure that the Group improves its sustainable profitability while achieving its commitment to zero CO2 emissions in Europe by 2050.

Luca de

Meo, CEO of Groupe Renault, said: "Renaulution is about shifting the Group's growth strategy from a volume to a profit orientation. This is not just a turnaround, it is a far-reaching change in Renault's business model. We have now laid a stable and healthy foundation for performance development. Starting with engineering, we will streamline our operations, right-sizing where necessary and reallocating resources to high-potential products and technologies. This increased efficiency will power Renault's future product line-up, particularly in terms of technological content, electrification and competitiveness. It will also boost the development of the Renault Group's brands, each of which has its own clear, differentiated area of development and is responsible for its own profitability and customer satisfaction. We will transform from a technology-enabled automotive company to an automotive-enabled technology company. By 2030, the Group will generate at least 20% of its revenues from the Services, Data and Energy business. We will steadily achieve this goal by relying on the company's strong assets and on the skills and dedication of its employees. The 'Renaulution' strategy will ensure that the Group improves its sustainable profitability while achieving its commitment to zero CO2 emissions in Europe by 2050."

The new 'Renaulution' strategy of the Renault Group consists of the following key elements:

1. Accelerating efficiencies and taking responsibility for competitiveness, costs, development time and time to market.

Enhance engineering and manufacturing efficiency, speed and performance through alliance synergies.

Model platforms will be rationalized and optimized from 6 to 3 (80% of the Group's sales are based on these 3 alliance platforms), and powertrain will be rationalized and optimized from 8 series to 4 series.

All models launched on existing platforms will enter the market within 3 years.

Adjusting capacity appropriately from 4 million units in 2019 to 3.1 million units in 2025.

Improve efficiency levels with suppliers.

Group Renault's international business will be shifted towards higher-margin businesses:

Particularly in Latin America, India and South Korea, while capitalizing on the competitiveness of the Spanish, Moroccan, Romanian, and Turkish markets and creating more synergies with the Russian market.

Groupe Renault will adhere to strict cost control:

Fixed cost reductions and early realization of the cost control plan to raise total cost control to the level of 2.5 billion euros in 2023, with a target of 3 billion euros in 2025 (including fixed cost changes).

Variable costs will achieve a reduction of €600 per vehicle by 2023.

Reduce investments (R&D and capital expenditures) from around 10% of revenues to less than 8% by 2025.

All these efforts will help strengthen the Renault Group's resilience and reduce its break-even point by 30% by 2023.

2. Each of the four business units has its own identity and positioning.

This new model will create a rebalanced and more profitable product matrix, with 24 products by 2025, half of which are spread across the C- and D-segment, including at least 10 pure electric vehicles. This new value-driven organization and product offensive will ensure better pricing and product mix. ?

New wave for Renault brand

The brand will reflect the modernity and innovation of the automotive industry from the inside out in the areas of energy, technology and mobility services. As part of the strategy, the Renault brand will boost its portfolio in the segment with a C-segment offensive and will strengthen its position in Europe while focusing on profitable segments and channels in key markets such as Latin America and Russia.

The Renault brand will build on the group's strong assets to become a leader in electrification by 2025:

The "Electro pole" project is expected to be located in the north of France, and will be the Renault group's largest electric vehicle production capacity globally.

Hydrogen joint venture (from fuel cell stacks to complete vehicles)

Creating Europe's "greenest" product portfolio

Half of all models on the market in Europe are purely electric, with a higher profit contribution than fuel cars

Challenger in the hybrid market, with 35% of products equipped with hybrid systems. equipped with hybrid powertrains.

The Renault brand is also committed to creating Software

République (Software **** and Nation), a collection of high-tech ecosystems, to become a player in key technologies ranging from big data to cyber security. Renault will also become a leader in the circular economy, offering electric vehicles and energy services through its Circular Economy Factory (Re-FACTORY) in Flins (France).

Dacia-Lada brands

Dacia will continue to maintain its trendy style, while Lada will continue its rugged, hard-edged styling, breaking away from the growth of the C-segment market while offering affordable, technologically sophisticated products for consumers on a budget.

Ultra-efficient business model.

Designed to cost.

Improved efficiency: optimized from 4 platforms to 1, 18 body types to 11, and increased average production from 300,000 units/platform to 1.1 million units/platform.

Revamped competitive lineup to break into the C-segment.

Launch seven models by 2025, two of them in the C-segment.

Revival of iconic models.

Leveraging the Group's technological assets to reduce CO2 emissions.

The Alpine brand

Combining Alpine Cars, Renault Sport Cars Division and Renault Sport Motorsport Division into a mature, new, lean and intelligent entity dedicated to the development of unique and innovative sports cars.

100% pure electric product program to support brand expansion.

Leveraging the scale and capabilities of Groupe Renault and the Alliance, based on the CMF-B and CMF-EV platforms, a global production system, a strong purchasing department, a global distribution network and RCi financial services to ensure optimal cost competitiveness.

F1 remains at the heart of the program and will continue its quest to win on the track.

Working with the Lotus brand to develop the next generation of electric sports cars.

Aiming for profitability by 2025, including investment in motorsport.

The Mobilize brand, going beyond cars

This new business unit aims to develop new profit streams from data, mobility and energy-related services for the benefit of car users and to generate more than 20% of the Group's revenues by 2030.Mobilize will enable Groupe Renault to enter the new mobility sector more quickly, offering other brands and external partners providing solutions and services.

The three main tasks are as follows:

Improve car usage (currently 90% unused).

Better residual value management.

Achieving the goal of zero CO2 emissions.

Unique, Convenient and Valuable Program:

4 exclusive vehicles, 2 for **** hedging services, 1 for internet car service and 1 for last mile delivery.

Innovative financial solutions (subscription, leasing, pay-as-you-go).

Specialized data, services and software platforms.

New repair and refurbishment services (circular economy factories).

China strategy

China plays an important role in the Renault Group's global strategy. In China, the Group's strategy is currently focused on electric vehicles and light commercial vehicles, with the development of locally-branded models," the company said. Going forward, the company will reshape its business model in China, capitalize on its assets in the country, and leverage China's competitive industrial ecosystem to develop new mobility solutions for the Chinese and global markets. Renault is also working with the Lotus brand to develop the next generation of electric sports cars.

From December 2020, Renault has begun exporting the "Dacia Spring

Electric" electric car from China to Europe. Produced by Renault's Chinese joint venture with Nissan and Dongfeng, EJT, the car is a European sister to the Renault eNo on the same platform. In addition, in the Renault-held joint venture JLG New Energy,<a class="hidden" href="/renult/" title="Renault