Renault Changes Global Brand Strategy, Seeks Profitability in Brazil

RIO DE JANEIRO, BRAZIL – After announcing a major global restructuring, including layoffs worldwide, Renault is shifting its brand strategy from volume to profitability – or “value”, as announced this Thursday, January 14th. The company also pledges to pursue profit in Brazil.

“We are currently engaged in talks with the Brazilian operation. Our focus will no longer be market share, we have already begun a pursuit of profitability,” said Luca de Meo, Renault group CEO, at a press conference in Paris, France, after introducing the company’s new global plan.

Renault presented an extensive business plan which is based on a focus on electrified vehicles, in addition to the creation of an exclusive mobility unit.

De Meo, who was appointed last year, stated that the plan in Brazil included a 10% market share, but that henceforth the main focus will be profitability.

“In the talks with the Brazilian operation, we made clear that the priority is no longer market share. When the market improves, we will be well positioned”, said the executive. Renault closed 2020 as the fifth best selling car brand in the country, with 7.43% market share. The company reached 6.75% of market share in the seventh position in the national ranking with light commercial vehicles.

In Brazil, Renault models are made using the Romanian-made Dacia platform, a sober content and design brand, with lower costs. However, from now on the group is pledging a “revolution” in the brands – the plan launched today was entitled “Renaulution” – with a focus on electrification and design. This includes the Dacia and Lada labels.

Restructuring

Henceforth, the group will be divided into four business units: Renault, Alpine (high performance, including the name change from Formula 1 to Alpine), Dacia-Lada and Mobilize (mobility).

The new plan includes the following pillars:

-Rationalization of platforms from 6 to 3;
-All models to be launched based on existing platforms will reach the market in less than three years;
-Reducing industrial capacity from four million units in 2019 to 3.1 million by 2025;
-Reinvent efficiency with suppliers.

According to De Meo, the consumer market is changing and the group intends to position itself as the global leader. “Cars will change, new opportunities will arise. Renault will lead the transition to electrical, we have all the qualities to do this.”

By 2023, the group’s goal is to achieve over 3% operating margin, approximately EUR 3 billion of free cash flow accumulated from the automotive division (between 2021 and 2023), lower investments – to around 8% revenue – and a 30% lower break even. By 2025, the operating margin target is 5%.

In addition, the plan includes reaching 20% of revenue from services, data processing and energy sales by 2030. “Let’s move from a car company that works with technology to a technology company that works with cars.”

In this restructuring, De Meo states that the group is not expected to announce further layoffs. “We want to be remembered for creating value and also jobs.”

The new strategy will create a “rebalanced and more lucrative” product portfolio, according to the company, with 24 launches by 2025. Half of them in segments C and D (SUVs, basically) and at least ten models 100% electric.

Alliance with Nissan

Although De Meo said little about Nissan during the talk with journalists, the executive reinforced that the alliance continues to be of paramount importance for Renault. According to the French group’s new plan, 80% of production platforms will be shared with Nissan and Mitsubishi.

“Our alliance with Nissan remains strong, so much so that the platforms used in our production will be widely used together.”

Since the arrest of Carlos Ghosn, former CEO of the Renault-Nissan Alliance, the partnership’s sustainability has been at stake. However, De Meo made a point of stressing the value of the alliance, which has yielded around 7 million in sales for the brands over the last full year.

Car sharing

The new Mobilize business unit proposes increased use of cars which, according to Renault, remain stopped for 90% of the time. The proposal also includes the widest and fastest access of electric vehicles worldwide.

In addition to vehicle sharing for individuals, the unit will also provide fleet management and data processing services, aiming to better anticipate vehicle demand and distribution.

Within this strategy, Mobilize will have four dedicated electric models. One of them, only 2.3 meters long for two people, aims at agile mobility and taking up minimal room in traffic.

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