Renault’s new strategic plan in early 2021

Renault announced its new strategic plan, “Renaulution”, in early 2021.

Boulogne-Billancourt, January 14, 2021 – Following approval by the Board of Directors, Luca de Meo, CEO Groupe Renault, presents today “Renaulution”, a new strategic plan, which aims to shift Groupe Renault’s strategy from volume to value.

This strategic plan is structured in 3 phases that are launched in parallel:

  • “Resurrection”, running up to 2023, will focus on margin and cash generation recovery,
  • “Renovation”, spanning up to 2025, will see renewed and enriched line-ups, feeding brand’s profitability,
  • “Revolution” from 2025 and onwards, will pivot the business model to tech, energy and mobility; making Groupe Renault a frontrunner in the value chain of new mobility.

The Renaulution plan will restore Groupe Renault’s competitiveness by:

  • taking the 2o22 plan1 one step further, driving efficiency through engineering and manufacturing, to reduce fixed costs and to improve variable costs worldwide,
  • leveraging on current Group’s industrial assets and electric leadership in Europe,
  • building on the Alliance to boost our reach in products, business and technology coverage,
  • accelerating on mobility, energy-dedicated and data-related services,
  • driving profitability through 4 differentiated business units based on empowered brands, customers and markets oriented.

A new organization will roll-out this plan: the functions, with engineering at the forefront, are accountable for the competitiveness, costs and time-to-market of the products of the brands. The fully-fledged, clear and differentiated brands manage their profitability.

In accordance with this value-driven organization, the company will no longer measure its performance on market shares and sales but on profitability, cash generation and investment effectiveness.

The Group sets new financial objectives:

  • By 2023, the Group targets to reach more than 3% group operating margin, about €3bn of cumulative automotive operational free cash flow2 (2021-23) and lower investments (R&D and capex) to about 8% of revenues,
  • By 2025, the Group aims for at least 5% group operating margin, about €6bn of cumulative automotive operational free cash flow² (2021-25), and a ROCE3 improvement by at least 15 points compared to 2019.

The Renaulution plan will ensure the Group’s sustainable profitability while keeping on track with its Zero CO2 footprint commitment in Europe by 2050.

Who is Renault?

Based on the same announcement, the company profile of Renault is described as follows.

Groupe Renault is at the forefront of a mobility that is reinventing itself. Strengthened by its alliance with Nissan and Mitsubishi Motors, and its unique expertise in electrification, Groupe Renault comprises 5 complementary brands – Renault, Dacia, LADA, Alpine and Mobilize – offering sustainable and innovative mobility solutions to its customers. Established in more than 130 countries, it currently employs more than 180,000 people and has sold 2,9 million vehicles in 2020. Ready to pursue challenges both on the road and in competition, Groupe Renault is committed to an ambitious transformation that will generate value. This is centered on the development of new technologies and services, and a new range of even more competitive, balanced and electrified vehicles. In line with environmental challenges, the Group’s ambition is to achieve carbon neutrality in Europe by 2050.

Clear path is necessary in an uncertain age

A coined word, “Renaulution”, is probably divided into two words, which are “Renault” and “Revolution”. Renault explains its new strategic plan by distinctive three phases such as “Resurrection”, “Renovation” and “Revolution” so that “Revolution” is the last and critical phase to realize the transformation from volume to value. Of course, execution is more difficult than theory or planning but it is better for us to set clear path of the organization in an uncertain age. This is because our business environment is changed rapidly and drastically so that clear path can be guidelines for employees for their working especially in big companies like Renault. The message “from volume to value” is simple but strong message for employees as well as stakeholders. When Carlos Ghosn, who is a former CEO of the French car giant, run the company, volume was the key criteria of the company. As a result, the company expanded its factories across the globe and wanted to sell its cars by using incentives in the US. However, his scandal, the effect of the pandemic, electrification, carbon neutrality and the change of consumer’s mind affected the company a lot. 2021 is the year to revive Renault and actually “Resurrection” is the first step of the new strategic plan. Transformation takes time and it is a long journey. The announcement is just first step to achieve “Renaulution”.