Automotive: Renault and the great electric challenge – Economy

Make the crisis an opportunity. Easy, the formula has never been more relevant to manufacturers hit hard by the health shock, component shortages, recession, market collapse and turmoil caused by the climate crisis and war.

For Renault, caught in turmoil in 2018 following the fall of Carlos Ghosn and the clash with Nissan, the health crisis of early 2020 could even be fatal. Was the creator of the Billancourt cars, symbol of the popular French car, going to disappear?

The conviction of Luca de Meo

Brought to the head of the group two years ago, passed by Fiat, Audi, Seat, Luca de Meo is a man of art. His conviction: Renault must change the times, the organization and the culture. Give up without remorse what has failed. Propel the brand into the future.

In Europe, this future is called electric, which Renault pioneered with Zoé. It was ten years ago. The revolution is happening. What will she give birth to? Renault will never be a “small” French Tesla. Not a Stellantis who, with Peugeot, is playing the premium access card. Even less a Volkswagen that, after dieselgate, has invested heavily in its strategy of electric and electrified models, which are more expensive and more profitable.

Produce less but earn more, that’s the point. Renault models, when they sell as well as Clio or Captur, don’t generate enough cash to fund the billions needed for the big shift to zero carbon. Change the model or collapse despite financial support from the state. From January 2021, the Italian boss announces the color: completely new range, disruptive design, technical innovation, website modernization and conversion, digitalization, staff training, end of discounts, price increase… A real turnaround.

“The best range for thirty years”

Like Tavares when he arrived at PSA, De Meo cleans the factories and the ranges. The climate crisis is shaking the industry. Brussels’ anti-CO2 restrictions are more intransigent. And the end of thermal energy in Europe predicted for 2035! Overwhelmed by the SUV wave, served by a dated design, Scénic, Talisman, Espace, Kadjar pass from life to death. Another icon, the Twingo is holding up… thanks to the success of its electric version. Double or give up?

“The next product cycle will give us the best range of cars in thirty years”, prophesies the general manager. The electric Megane E-Tech (25,000 sales in three months) delights Luca de Meo. The Losange’s first connected compact, launched well before its enthronement, embodies the announced big change and Renault know-how. Specific platform, disruptive design, futuristic and tasteful interior, quality recyclable materials: the Mégane E-Tech is no longer a traditional Mégane. Zoé follows her path until the arrival of the electric R5.

The return of R5

Reinterpreted, the mythical R5 is one of eleven new models announced by De Meo between now and 2026. Next comes another icon of the 60s: the 4 L, eagerly awaited. Not to mention the Scénic’s successor, with sculpted design, again in rupture. As for the future Alpine, they will keep the brand’s DNA, promises the Renault boss. All electric, that’s obvious. Clio, Captur, Austral, thermal dealers equipped with “f ll hybrid” and rechargeable hybrid technologies remain true to their position.

The thermal plant banned in Europe, Renault, like its rivals, cannot ignore the gasoline and diesel vehicles that will continue to run in the main export markets. The valuable Dacia subsidiary has carte blanche to develop its own image and product strategy, enter the world of electrification while cultivating its main asset, a superior price-performance ratio.

the end of discounts

Luca de Meo also put an end to the old discounting practices to increase volumes against Peugeot in particular. The average price of their cars has increased, as has the competition. What will drivers say when electricity is much more expensive than its thermal equivalent? This is for purchase, not use, corrects de Meo. Zero-emission enthusiasts currently prefer rental formulas. Since his cars are more valuable, the manager is convinced that “the customer will have to pay for his car at the corresponding price” and, therefore, that he will…

The challenge is crucial for Renault, which has suffered a third historic shock as it withdraws from Russia, its second-largest market after Europe. As a result of the invasion of Ukraine, the group sold (for the symbolic ruble) its 67.69% stake in Avtovaz, maker of Lada. Result: 400,000 fewer cars and a net accounting loss of 2.3 billion.

In the positive column, the operating margin exceeds 5%. That’s more than double Stellantis. But despite a sluggish market, despite a production loss of 300,000 vehicles due to semiconductor shortages, the momentum and profits are back. For Renault, which we thought was lost, it is anything but anecdotal.

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