Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

New Renault boss plans leaner, electric future

Stock MarketsJan 14, 2021 07:55AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: The logo of Renault carmaker is pictured at a dealership in France 2/2

By Gilles Guillaume and Sarah White

PARIS (Reuters) - French carmaker Renault (PA:RENA) pledged to slim down and focus more on technology as its new CEO laid out plans to revive a business hammered by management turmoil and the COVID-19 crisis.

In a departure from the world-conquering view of former boss-turned-fugitive Carlos Ghosn, Chief Executive Luca de Meo said Renault would reduce the number of cars it turns out, focus on its most profitable models and on new electric launches - including a revamped version of the classic Renault Super Cinq.

"We grew bigger, but not better," De Meo said in an online presentation, which aimed to project a jazzier, more youthful brand under a street-art style "Renaulution" slogan.

De Meo, who arrived last July after a stint running Volkswagen (DE:VOWG_p)'s Seat brand, said the task now was to "steer our business from market share to margin."

Even before the COVID-19 pandemic upended the car industry, Renault was struggling to adjust to life without Ghosn, the architect and long-time boss of its alliance with Japan's Nissan (OTC:NSANY). Ghosn was arrested in Japan in November 2018 on financial misconduct charges, which he denies, and later fled.

The company also faces new challenges, as the European Union tightens emissions regulations and rivals PSA and Fiat Chrysler Automobiles complete their merger to create Stellantis, the world's fourth-biggest automaker, with potentially more resources to meet the industry changes.

Renault's car production will drop to 3.1 million vehicles by 2025 from 4 million in 2019 - and down from the 5 million per year targeted by Ghosn in 2017.

Half of new launches will be electrified, manufacturing will be simplified and Renault will also focus on areas like car sharing and ride hailing, with the aim of deriving a fifth of revenues from these mobility services by 2030.

De Meo ruled out further job cuts, beyond the 15,000 it earmarked last year over the next two to three years.

But he hiked cost savings goals, with an extra 500 million euros ($608 million) planned to reach 2.5 billion euros by 2023, and then 3 billion euros by 2025.

Investors were initially unimpressed, with Jefferies (NYSE:JEF) analyst Philippe Houchois describing profit goals as "underwhelming", reflecting the "depth of challenges at Renault."

Shares had largely recovered by 1153 GMT, trading down 0.3%.

TECHNOLOGY

Underscoring attempts at a fresh start for its troubled alliance with Nissan, Renault included a video message in its presentation from the Japanese carmaker's boss Makoto Uchida, who gave the plan his thumbs up.

Under de Meo's efficiency drive, Renault will build vehicles on fewer shared platforms to pare back costs by 600 euros per car by 2023, and aim to cut development time for new vehicles by a year, to under three years.

The 53-year old's shift to a more electric line-up will include building a battery plant in France with one of the company's suppliers, while the company is working on partnerships in areas like technology.

"We'll move from a car company working with tech to a tech company working with cars," de Meo said.

Renault aims to lift operating margins to 5% by 2023. It also plans to lower capital spending and research costs to 8% of revenue from 10% by 2025. Together, these measures should lower Renault's break-even point by 30% by 2023.

The company has yet to publish margins for 2020, though following the COVID-19 pandemic which disrupted operations, they are likely to be lower than the 4.8% hit in 2019.

Renault also said it was targeting automotive free cash flow of 3 billion euros by 2023, and 6 billion by 2025.

"The commitment to short-term cash targets is positive as it remains the key concern for investors," Citibank analysts wrote in a client note.

Renault said it had drawn an additional chunk of its 5 billion euro government-guaranteed loan secured early in the COVID-19 crisis.

The company said it would combine all its sports car efforts into one unit "dedicated to developing exclusive and innovative" vehicles, with Formula One racing "at the heart of the project."

($1 = 0.8224 euros)

(Additional reporting and writing by Nick Carey. Editing by Mark Potter)

New Renault boss plans leaner, electric future
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email