Renault has outlined its ‘Renaulution’ plan, which aims to shift the Group’s strategy from volume to value.
The plan is structured in three phases which 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 brands’ profitability
- ‘Revolution, from 2025 and onwards, will pivot the business model to tech, energy and mobility; for the value chain of new mobility
Renault maintains its Renaulution plan will restore the Group’s competitiveness by:
- Taking the 2022 plan one step further, driving efficiency through engineering and manufacturing, to reduce fixed costs and to improve variable costs worldwide
- Leveraging on current Group industrial assets and electric leadership in Europe
- Building on the Alliance to boost reach in products, business and technology coverage
- Accelerating on mobility, energy-dedicated and data-related services
- Driving profitability through four differentiated business units based on empowered brands, customers and markets
A new organisation will roll-out the plan: functions, with engineering at the forefront, are accountable for competitiveness, costs and time-to-market of the brands. The fully-fledged, clear and differentiated brands manage their profitability.
In accordance with the value-driven organisation, the company will no longer measure its performance on market shares and sales, but on profitability, cash generation and investment effectiveness.
The Group is setting new financial objectives:
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- By 2023, the Group targets to reach more than 3% group operating margin, around EUR3bn (US$3.6bn) of cumulative automotive operational free cash flow (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 EUR6bn of cumulative automotive operational free cash flow (2021-25), and a ROCE 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
“The Renaulution is about moving the whole company from volumes to value,” said Renault CEO, Luca de Meo. “More than a turnaround, it is a profound transformation of our business model. We’ve set steady, healthy foundations for our performance.
“We’ve streamlined our operations starting with engineering, adjusting our size when required, reallocating our resources in high-potential products and technologies. This boosted efficiency will fuel our future line-up: tech-infused, electrified and competitive.
“And this will feed our brands’ strength, each with their own clear, differentiated territories; responsible for their profitability and customer satisfaction. We’ll move from a car company working with tech to a tech company working with cars, making at least 20% of its revenues from services, data and energy trading by 2030.
“We’ll get there steadily, leaning on the assets of this great company, on the skills and dedication of its people. The Renaulution is an in-house strategic plan we’ll roll-out and achieve the same way we’ve crafted it: collectively.”