Renault makes its revolution to become the 2030 car champion

“We can’t overtake fifteen cars when the weather is good, but we can overtake fifteen cars when it’s raining,” said Renault president Luca de Meo this Tuesday, taking up a phrase from Ayrton Senna, the famous driver. 1994 at the San Marino Grand Prix. This quote alone illustrates how the former patient of the automotive industry, saved by the French state during the health crisis, aims to establish itself as a leader in innovation at a time when the sector is forced to lead an energy transition. it is weakened, not only by an industrial crisis linked to a shortage of semiconductors, but also by rising energy costs and the risk of falling demand due to inflation and a deteriorating economy.

“We want to be among the best in the market”, explains, in essence, the one who took over the reins of Renault in July 2020… Therefore, an investor day was needed to clarify the markets about the projects that Renault intends to carry out in the future. next ten years, but above all on how it intends to finance them.

The new value chains

Already in 2021, in Renaulution’s strategic plan, Luca de Meo had described three phases that should lead to the date of 2030: resurrection, renewal and then revolution. The first phase has been completed since 2021. The restructuring plan is complete and the group is back in the green. The second phase consisted of redesigning a new range… This is already in place and new products are being developed. For Luca de Meo, it was time to spend the third launching his revolution. This should allow the group to prepare itself for the new world of automobiles that should emerge around 2030 and that should redefine the terms of the value chain. For Renault, it’s about anticipating innovations that could or should be the first to contribute to profits. Luca de Meo identified four new value chains: the electric car, software, mobility and the circular economy.

“This will allow us to enter a 200 billion euro market, which is double our current scope. This is growth potential not seen since the emergence of China in the automotive industry,” she said.

In order to position itself without leaving any penalties in terms of cash and debt, Luca de Meo wants to establish joint ventures with relevant players that bring skills that would be too long and too expensive to recreate internally. In software, he created Software Republique with Dassault Systemes, Orange, Atos and ST Microelectronics. He also announced new partnerships with Google. But the surprise of the day is the arrival of the american chip maker, Qualcomm, in the capital of Ampere, the subsidiary that will be dedicated to electrification. Renault did not quantify the value of the investment, but the presence of such a shareholder is a great asset. Luca de Meo declined to speak about Nissan, whose financial community is, however, awaiting commitments to also enter Ampere’s capital. The announcements are expected later in the month as part of a broader rebalancing of the Alliance.

Heat engines will continue to pay off

Luca de Meo also decided to create a subsidiary specializing in thermal engines. Named Horse, it will receive in its capital the powerful Chinese group Geely, with up to 50%. Thus, this new entity will supply the Renault and Geely brands, including Volvo, a subsidiary of the Chinese group. Renault has already announced eight customers for these products, ranging from engines to gearboxes and hybridization systems. The revenue target is 15 billion euros per year. The incorporation of Horse should allow Renault to expand its market coverage, increasing it from 40 to 80%.

In the circular economy, Renault is also working to find partners to finance the €500 million that will be needed by 2030.

Thus, Luca de Meo is reorganizing the group to be present in all the new automotive value chains of tomorrow. By limiting investments, it also limits your control of the added value of these new profit relays. But in reality, Renault maintains the advantage in its historic activity: the sale of cars. With Power, the name of Renault’s historic channel, the automotive group remains 100% focused on the car design and sales business. It is simply a matter of chasing profit thanks to a reinforced product strategy and an ambitious pricing policy. The offensive in the C (compact) segment should be a great lever for profitability. Renault expects this segment to represent 50% of sales by volume in 2025. A big advantage as a compact car brings twice the profit of the category below.

Dacia, the Crown Jewels

With Dacia, Renault also wants to consolidate and expand this source of profit, opening up the range to wider market coverage. The so-called low-cost brand has already generated an operating margin of 10%, that is, twice the group’s performance in the first half, and should rise to 15% in 2030… A monumental number in the market since outside the luxury brand , few groups do not have double-digit operating margins in the automotive industry.

Luca de Meo still keeps the suspense with Alpine whose next model is still awaited. The premium sports brand wants to launch up to six models over the next few years with the ambition to be very aggressive internationally. Alpine could venture into the D and E segments to meet Chinese market expectations.

The commercial vehicle is also transformed

Another surprise, the creation of a new subsidiary around utility vehicles. This branch is historically a major supplier of profits to Renault, with around 20% of profits. Luca de Meo wants to go further and also wants to break up this activity. Flexis is looking for another partner to answer two major future questions: the arrival of new competitors and the last mile issue, a real challenge in urban logistics. Luca de Meo believes that hydrogen is a relevant answer to these questions. The group is working on a FlexEvan concept that aims to be “as much as a Kangoo, the capability of a Trafic and the turning radius of a Clio”. “We are going to reduce the total cost of use by 30% over the entire life cycle, which will allow us to reimburse the new price of the vehicle”, launched Luca de Meo, according to whom this cost amounts to 100 thousand euros. in total.

For Luca de Meo, the situation is not just an accumulation of problems, it is a fantastic source of opportunities that he wants to take advantage of intelligently. An ideal climate to overtake fifteen vehicles as Ayrton Senna said…