Renault Group Renaulution strategic plan prioritises profitability

Renaulution is the new strategic plan from Renault Group, designed to redirect the group’s strategy towards profitability rather than market share or absolute sales volumes.

The plan is divided into three stages: Resurrection, Renewal and Revolution:

• Resurrection - focuses on restoring profit margins and generating liquidity, running until 2023;
• Renewal - follows the previous phase and aims to deliver “the renewal and enrichment of ranges that contribute to the brands’ profitability”;
• Revolution - begins in 2025 and is intended to transform the Group’s economic model, shifting it towards technology, energy and mobility.

The priority? Profit

Aimed at restoring Renault Group’s competitiveness, the Renaulution plan puts value creation at the centre of the group’s strategy.

What does that mean? Put simply, performance will no longer be assessed according to market share or sales volume, but through profitability, liquidity generation and investment efficiency.

A wave of new models

As a car maker depends on producing and selling cars, much of this plan will inevitably rely on the introduction of new models.

By 2025, the brands within Renault Group will introduce no fewer than 24 new models. Half of these will be in the C and D segments, while at least 10 will be fully electric.

There is more to it, however. Costs must be cut, as announced in another plan specifically created for that purpose. Renault Group therefore intends to reduce its number of platforms from six to just three - 80% of the Group’s volumes are based on three Alliance platforms - and cut powertrain groups from eight to four families.

In addition, every forthcoming model using an existing platform will reach the market in under three years, while the Group’s industrial capacity will be reduced from four million units in 2019 to 3.1 million units in 2025.

Renault Group also plans to concentrate on markets offering the highest profit margins and enforce strict cost discipline, lowering fixed costs by €2.5 billion by 2023 and by €3 billion by 2025.

Finally, the Renaulution plan also calls for investment and expenditure in research and development to fall from 10% of turnover to below 8% in 2025.

How will Renault Group restore competitiveness?

To rebuild Renault Group’s competitiveness, the plan unveiled today begins by making each brand responsible for managing its own profitability. At the same time, it brings engineering to the forefront, giving it responsibility for areas including competitiveness, costs and time to market.

As part of this competitiveness recovery, Renault Group also wants to:

• improve engineering and manufacturing efficiency in order to cut fixed costs and enhance variable costs globally;
• make use of the Group’s existing industrial assets and its leadership in electric vehicles across Europe;
• draw on the Renault-Nissan-Mitsubishi Alliance to strengthen its capabilities in product, business and technology development;
• accelerate mobility, energy and data-related services;
• improve profitability through four separate business units. These will be “based on the brands, responsible for their activities, and focused on customers and the markets in which they operate”.

Through this plan, Renault Group expects to secure lasting profitability while meeting its commitment to achieve carbon neutrality in Europe by 2050.

Speaking about the plan, Luca de Meo, CEO of Renault Group, stated: “We will move from a car company that uses technology to a technology company that uses cars, in which at least 20% of revenue, by 2030, will come from services, data, and energy trading”.