Groupe Renault CEO Luca de Meo announced the “Renaulution”, a new strategic plan aimed at shifting Groupe Renault's goals from volume to value, following the approval of the Board of Directors.
This strategy plan, launched in parallel with each other Of 3 stages consists of:
- "Resurrection" will continue until 2023, focusing on improving profit margin and cash generation functions,
- The "renewal" will last until 2025, and will include renewed and enriched product groups that nurture the profitability of the brand.
- The "Revolution" will position its business model, which will cover 2025 and beyond, around technology, energy and mobility, making Groupe Renault a pioneer in the new mobility value chain.
As part of the Renaulution plan, to make Groupe Renault competitive again, the following will be done:
- Taking Groupe Renault's 2o22 plan announced last year one step further, increasing efficiency through engineering and manufacturing, reducing fixed costs and improving variable costs around the world,
- Benefiting from the group's existing industrial assets and leadership in the field of electric vehicles in Europe,
- To expand our sphere of influence within the scope of product, business and technology by taking advantage of İttifak,
- To speed up mobility, energy-specific services and data-related services,
- To increase profitability in 4 different business areas by focusing on supported brands, customers and markets.
The plan will be implemented with a renewed organizational structure: The new organizational structure will be responsible for the competitiveness of the brand's products, costs and time to market, and functions within the scope of the new organization. Profitability will be managed by fully mature, clear and differentiated brands.
As part of this value-focused organization, the company will now measure its performance not by market share and sales, but by profitability, cash generation and investment efficiency.
Determined by the group new financial targets:
- By 2023, the group aims to reach more than 3 percent of group operating profit, approximately 3 billion euros cumulative automotive operational free cash flow (2021-23) and reduce its investments (R&D and capital expenses) to approximately 8 percent of its revenue. The Group aims to achieve at least 2025 percent of group operating profit and a cumulative automotive operational free cash flow of approximately EUR 5 billion by 6 (2021-25) and improve ROCE by at least 2019 points compared to 15.
The Renaulution plan will enable the group to achieve sustainable profitability by 2050 without compromising its zero (CO2) carbon footprint commitment.
Groupe Renault CEO Luca de Meo Renaulution announced at a press conference about the plan, saying: “The aim of the Renaulution is to move the entire company from volume to value. This indicates a radical change in our business model rather than a comeback. We have set healthy and solid foundations for our performance. We streamlined our operations, starting with engineering, adjusting the size of our company as needed, and redistributing our resources to high potential products and technologies. This increase in efficiency will power our electric and competitive products, intertwined with future technology. This will feed our brands, each addressing its own clear and segregated regions and will be responsible for its own profitability and customer satisfaction. We will evolve from a technology-powered car company to a car-powered tech company, and by 2030 we will generate at least 20 percent of our revenue from services, data and energy trading. We will reach this point based on the assets of this great company and the skills and commitment of its employees. Renaulution is an internal strategy plan that we will implement and achieve - collectively - exactly the way we have created it. ”
Main elements of the Renaulution plan:
- Responsible for competitiveness, costs, development time and time to market speed up the efficiency of functions.
- Engineering with the alliance to increase production efficiency, speed and performance:
- Reducing the number of platforms from 6 to 3 (based on three Alliance platforms for 80 percent of Group volume) and the number of relay systems from 8 to 4.
- All models to be released on existing platforms will be on the market in less than 3 years.
- Industrial capacity, which was 2019 million in 4, will be restructured to 2025 million units in 3,1 (Harbor standard)
- Efficiency will be reorganized with suppliers.
- Directing the international footprint of the group towards highly profitable activities: Particularly in Latin America, India and Korea in doing so, Spain, Morocco, taking advantage of our competitive position in Romania and Turkey will try to create more synergy with Russia.
- Tight cost discipline:
- Reduction of fixed costs: following earlier achievement of the 2o22 plan, this plan for 2023 was updated to 2,5 billion euros and a target of 2025 billion euros by 3 was set (including converting fixed expenses to variable expenses)
- Variable expenses: Upgrade 2023 euro per vehicle by 600
- Reduction of investments (R&D and Capital Expenditures) from 2025 percent to less than 10 percent by 8
All these efforts will increase the resilience of the Group and reduce the transition point to profit by 2023 percent by 30.
- Strong identity and positioning in four business units: This new model will create a rebalanced and more profitable product portfolio, with 2025 vehicles (half the C / D segment) and at least 24 electric vehicles to be launched by 10.
This new value-oriented organization and product offensive will provide a better price and product mix.
Renault 'New Wave' strategy
Beyond the automotive industry, the brand will embrace modernity and innovation in areas such as energy, technology and mobility services.
As part of its strategy, the brand will mobilize its segment mix with a C segment attack and strengthen its position in the European market, while focusing on profitable segments and channels in key markets such as Latin America and Russia.
The brand will be supported by our strong assets:
- Leadership in the transition to electric vehicles by 2025:
- In the north of France, the "Electro pole", which will have the Group's largest electric vehicle manufacturing capacity worldwide,
- Hydrogen joint venture from fuel cell stack to vehicle
- Europe's greenest product mix
- Half of the vehicles launched in Europe will be electric vehicles with a higher profit margin (in €) compared to internal combustion engines.
- Competitiveness in the hybrid market with hybrid vehicles that make up 35 percent of the product mix
- Advanced Technology Ecosystem Assembly Facility: To become an important player in key technologies from big data to cyber security with "Software République"
- Electric vehicles and special services for energy through Flins Re-Factory (France) leadership in the circular economy
Dacia-Lada, Tout. Simplement
While the Dacia brand remains Dacia with a cool touch; Lada will maintain a more assertive position in the C segment by maintaining its tough and durable appearance and continuing to produce affordable products with proven technologies for smart buyers.
- Super efficient business models
- From design to cost
- Productivity increase: the number of platforms will be reduced from 4 to 1 and the number of body types from 18 to 11, increasing the average production from 0,3 million units / platform to 1,1 million units / platform.
- Renewed competitive product line and explosion in the C segment
- 2025 out of 7 models to be released in 2 will be in the C segment
- Iconic models will be revived
- CO2 efficiency: The technology assets of the group will be utilized (LPG for both brands, E-Tech for Dacia)
Alpine will bring together Alpine Cars, Renault Sport Cars and Renault Sport Racing under a new lean and smart company focused on developing specific and innovative sports cars.
- 100 percent electric product plan to support brand growth
- The CMF-B and CMF-EV platforms will benefit from the scale and capabilities of Groupe Renault and the Alliance, the global manufacturing footprint, strong purchasing arm, global distribution network and RCI Bank and Services financial services to ensure optimum cost competitiveness.
- The championship determination will be reiterated in F1, which is at the heart of the project.
- A new generation electric sports car will be developed with Lotus.
- Profitability is targeted in 2025, including investment in motorsport.
Beyond Automotive, Mobilized
This new business unit aims to create new profit pools from data, mobility and energy-related services to benefit vehicle owners and generate more than 2030 percent of the group's revenue by 20. By providing solutions and services to Mobilize, other brands and external partners, it will enable Groupe Renault to take a faster leap into the new world of mobility.
- Three missions:
- More time use for cars (90 percent not used)
- Better residual value management
- Carbon footprint zeroing stability
- A unique, accessible and useful offer:
- 4 vehicles designed for specific purposes, two for car sharing, one for vehicle calling and one for the final delivery stage
- Innovative finance solutions (subscription, rental, pay as you go)
- Private data, services and software platform
- Maintenance and renewal services (Re-Factory)