Luca de Meo, CEO of the Renault Group, together with Thierry Piéton, CFO of the group, outlined the strategy for the coming years… as well as the expected income
Revolution. This is how the third phase is known – after Resurrection and Renovation – of Renault’s Renaulution strategy and which Luca de Meo, CEO of Renault, presented today at Capital Market Day.
De Meo’s objective with this third phase of the Renaulution strategy is “to become a new generation automobile group”.
Behind this declaration of intent lies a goal that seeks to “adapt to the current environment”, for which the Renault Group will create dedicated organizations, and will take advantage of “a horizontal and ecosystemic approach to co-create, co-finance and expand strategic initiatives with top-tier partners “.
In this sense, the principles that will govern this Revolution will be efficiency, optimization of capital allocation, selection of the best partners and, above all, “lightness” of assets.
And so that the latter, the lightness of the assets, comes to fruition, the Renault Group is going to be divided into 5 business units, each with its own management and income statement: Ampere, Alpine, Mobilize, The Future is Neutral and Power.
Ampere: electric car unit and software
Although the diamond brand already has a long history in the development of electric cars with Renault ZE (Zero Emissions), the truth is that De Meo’s goal is for Ampere to be a “purely electric player”.
Ampere will develop, manufacture and market 100% electric private vehicles with Software-Defined-Vehicle (SDV) technology under the Renault brand.
It will be headquartered in France and will have 10,000 employees, of which 3,500 will be engineers dedicated to software development.
With the goal of producing around one million electric cars by 2031, Ampere will be responsible for developing and launching the new Renault 5 Electric, Renault 4 Electric, Renault Scénic and Electric, among many others in segments B and C.
As far as the so-called Software-Defined-Vehicle is concerned, Renault relies on two very relevant technology companies worldwide and North American for more details: Qualcomm and Google.
The first is dedicated to high-performance platforms for digitized electronic architecture, which has solutions such as the Snapdragon digital chassis.
As for the second, Google, precisely the Renault Mégane e-tech was the first to integrate the Google Automotive infotainment system, and it really works wonderfully.
As De Meo explained, partnering with Google to create this open Android-based platform allows Ampere to tap into one of the largest global ecosystems of independent app developers.
When asked if leaving the development of software and code in the hands of technology companies could pose a risk of loss in the value chain – an extreme that pushed the VW Group precisely to create the Cariad unit – De Meo replied that relying on Google is “cheaper and faster and allows you to create unique cars”.
In addition, De Meo believes that this way the cars that Ampere manufactures will be like mobile phones, with regular updates, which will make it possible for the vehicles to always be up-to-date in terms of both infotainment software and battery management, and they will not lose value. .
Alpine: world brand, electric and with competition DNA
As we told here at AUTO BILD a few months ago, Alpine is going to significantly expand its portfolio, and is going to bet directly on electrification, without intermediate steps of plug-in hybrids, because, as confirmed by Laurent Rossi, CEO of Alpine, to this medium , “does not compensate”.
Alpine will rely on business partnerships and investor support to accelerate its growth and international expansion.
Alpine’s plans are to launch the next A110, and two new models: a B-segment sedan and a C+ segment crossover. Alpine plans to launch two advanced technology vehicles in the D and E segments to support its international expansion.
Thus, half of Alpine’s growth will come from new markets beyond Europe, potentially including North America and China.
Mobilize: Vehicle as a Service Provider
Groupe Renault’s third business unit revolves around a key asset, Mobilize Financial Services (MFS), one of the largest finance companies in the market with 4 million customers.
Today, Mobilize is becoming a VaaS (Vehicle as a Service) provider, combining financial, mobility (Zity, for example), energy and data services at the same time.
In this sense, it should be noted that the Renault Group has already presented the Mobilize Limo, a vehicle intended for ride-sharing (VTC) fleets such as Cabify.
According to Renault, with the Vaas model, Mobilize will generate 3 times more revenue over the life cycle of the vehicle than with conventional sales.
The Future is Neutral: dedicated to the circular economy
With the name of The Future is Neutral (the future is neutral), this business unit aims to become a leader in the automotive circular economy.
The Future is Neutral offers closed-loop recycling solutions at every stage of a vehicle’s life: supply of parts and raw materials, production, use and end of life.
In addition, under the umbrella of The Future is Neutral will also be the operations of the IDM4.0 industrial data management platform, a solution to collect and standardize data and that allows control of processes and restoration of data from industrial equipment in a standardized and large-scale manner. scale.
Today more than 70% of industrial equipment is connected. The supervision of these teams has allowed, for example, since 2019, the detection of 300 alerts and avoid production stoppages.
Furthermore, by powering against real-time energy consumption data, this platform enables considerable savings and a higher level of efficiency.
Power: partnership with Geely for thermal and hybrid engines
The last of the Renault Group business units is, in fact, the essence of where the Renault Group started as we have known it until now before the Renaulution.
This unit is dedicated to the development of combustion and hybrid engines. To this end, the Renault Group has partnered with the Asian giant Geely and formed a joint venture (50%-50%), called Project Horse (horse).
This entity will develop engines, gearboxes, hybridization systems (xHEV) and batteries and will generate a turnover of more than 15,000 million euros with a volume of 5 million units per year.
As announced by De Meo, with Horse, the Renault Group will double its size and its market coverage, going from 40% to 80% worldwide. This growth is fueled by geographic expansion with access to North America and China.
It should be noted that although the Renault Group is strongly committed to electrification in Europe, vehicles with a combustion engine will continue to grow, especially outside Europe (Latin America, India, South Korea and North Africa).
The Dacia brand is also part of this business unit, which with models as successful as the Sandero, the Duster and others, already generates an operating margin of over 10% and aims to reach 15% in 2030.
Likewise, the Light Commercial Vehicles (LCV, vans) business unit is also located in Power. In this sense, Renault LCV will develop two disruptive projects: Hyvia (a Renault Group joint venture with Plug for hydrogen mobility) and FlexEVan (a family of electric utility vehicles defined around software).
Income, the crux of the matter
All this movement, this third phase of the Renaulution strategy that seeks to “lighten assets” does not imply, according to De Meo, job losses.
“This is a development exercise, not a restructuring exercise; it is time to put the right people in the right positions. I am going to put people closer to the business. It is an opportunity for people who were hidden in the pyramid that is Renault is now in the right position,” the Renault CEO explained in this regard.
On a financial level, with the Revolution phase, the Renault Group is aiming for an operating margin of more than 8% in 2025 and more than 10% in 2030.
In addition, a free cash-flow (free cash flow; amount of money the company is capable of generating in order to meet its obligations) is expected to exceed 2,000 million euros per year on average in 2023-2025, and more to 3,000 million euros per year on average in 2026-2030.
