Sino-French cooperation key to Renault’s growth in China
If Luca de Meo, CEO of Renault Group, shares something in common with the famed French thinker Victor Hugo, it is their unique understanding of revolution and their similar emphasis on and appreciation of China’s role in the world.
“If you wish to understand what revolution is, call it progress; and if you wish to understand what progress is, call it tomorrow,” said Hugo of the tremendous social and economic changes that took place in 19th-century France.
Hugo believed revolution is a core aspect of change, with the other elements being sublimation and harmony.
De Meo has seen the progress that is born out of revolution. Last year, the group sold 2.24 million vehicles, up 9 percent year-on-year, and its Renault brand was the best-selling French marque in the world.
These were the latest results of Renaulution, a strategic plan the Italian executive came up with in January 2021, within six months of his taking the helm of the automotive group.
The plan has three steps of Resurrection, Renovation and Revolution, to shift the company’s focus from volume to value and to restore the century-old company’s glory and competitive edge.
“At Renault, we embrace the waves of disruption and create our own ‘Nouvelle Vague’,” he said.
With the right strategy in place and the concerted efforts of the team, Renault has been gaining previously lost ground.
Among other things, its operating margin hit more than 5 percent in 2022, three years in advance, and free cash flow stood at around 2.7 billion euros ($2.93 billion) in the same year, almost one year faster than planned.
With these achievements, Renault kicked off the third chapter of the plan, named Revolution, in 2023, which is expected to turn the company into a next-generation auto firm.
“We intend to position ourselves faster and stronger than the competition on the new automotive value chains: electric vehicles, software, new mobility and the circular economy,” said de Meo.
Change requires patience and resilience. We’ll celebrate victories, learn from setbacks ...”
Weiming Soh, CEO of Renault China
At Renault, we embrace the waves of disruption and create our own ‘Nouvelle Vague’.”
Luca de Meo, CEO of Renault Group
“All this is one of the most progressive re-engineering projects of recent years in our industry, a Revolution in its kind,” he said.
The group will work on five aspects. It will continue to develop combustion and hybrid vehicles under the Renault, Dacia and Renault LCV brands, which are grouped together under the Power name.
Ampere, a pure EV and software company born of Renault, will lead its electric transition in Europe, where Renault has long been a popular choice among EV buyers.
Ampere is targeting a 30 percent average annual growth of revenues between 2023 and 2031. From 10 billion euros in 2025 with four vehicles, the company will target more than 25 billion euros of revenue in 2031 with seven competitive vehicles.
It will help turn Renault into an allelectric brand in Europe by 2030, and support Renault Group’s aim to achieve carbon neutrality in Europe by 2040 and worldwide by 2050.
Alpine will grow into a high-end zero-emission brand with its racing DNA. Mobilize focuses on the market of new mobility, energy and databased services.
And The Future Is NEUTRAL is the first 360-degree circular economy company in the automotive industry from achieving a closed loop system in materials to battery recycling.
As the group is speeding up its charge into the smart EV sector, de Meo, unlike many executives in the industry, does not see rivalry but instead opportunities of cooperation with players from China, which has been leading the world in the segment.
“The only thing we can do is to accept that, to actually look at them and be humble, but not playing the victim,” he said at the IAA Mobility 2023 in Munich in September, when asked about the increasing prevalence of Chinese brands in the market.
China was highlighted when he unveiled the Renaulution plan, saying “if any auto brand will not consider China, it will be like a table without a leg.”
It evokes the famous quote attributed to Hugo in 1861 about Europe and China: “Here, Apollo; there, the Dragon... These two worlds belong to the supreme taste and mark its two poles. At one end of there is Greece; at the other, China.”
The story of Renault and China began in France in 1925 when Deng Xiaoping, a Chinese student who would later become one of China’s most important leaders, came to work at the Renault fitting shop in Boulogne Billancourt for around a month.
In the 1930s, chassis were exported to the country for bodywork, and starting from the mid-1990s Renault has been pursuing a long-term presence in China in earnest.
Now the French carmaker has a wide network in the country, including joint ventures with local companies. One of them is called eGT, a partnership with Dongfeng, which produces the Dacia Spring for the global market.
Last year, the model’s sales totaled 61,803 units, up 26.4 percent yearon-year, making it the third best-selling EV model in Europe.
Weiming Soh, CEO of Renault China, said China is now at the forefront of the world in the smart EV industry thanks to its first-mover advantage, cost advantage and strong engineer dividend.
“We can see how the trend of the China auto industry evolves, from import of vehicles, to import of technology, to industrialization, to elite supply chain, to reconstructing the new ecosystem to reglobalization.”
The unprecedented innovation and prosperity in the Chinese vehicle market and Renault’s promising and reassuring results from its Renaulution campaign are set to propel the French carmaker’s business to new heights in the country.
“Change requires patience and resilience. We’ll celebrate victories, learn from setbacks, and channel our collective energy towards greatness,” said Soh.
“Our foundation set, we are shifting gear toward development and positive change. Over the next three years, expect challenges and creativity as we redefine success together,” he said.