Renault CEO: ‘Deals with the Chinese would be beneficial for both sides’

Renault is doing well again these days. Its turnover has grown by 17,9% to €52.5 billion, with a net benefit of €2.3 billion. Its free cash flow has turned around €3 billion now and has grown by €905 million last year.

More interestingly, the operational margin has increased to 7,9%, a record figure for the Group. “We realized the fastest recovery in automotive history,” boasts CEO Luca de Meo. He compared the recovery to the one Carlos Ghosn realized with Nissan when he took the helm of the ailing Japanese brand in 1999, or the one Carlos Tavares realized with PSA in 2013/2014.

Ready for the future

In earlier articles, we already spoke of Renault’s quick recovery and its future plans. In a talk with the French newspaper le Figaro, de Meo asks why people are always doubtful of the Renault results and suggests that we could deal with the Chinese instead of constantly fighting them.

“I really don’t know why there’s always a doubt hanging around our group,” de Meo interrogates. “It has been three years in a row that we have progressed constantly and realized results that are far better than the year before.”

This year is a very important one for Renault, as it launches at least two new pure electric vehicles, the new Scenic and the electric R5. The second one should be a game changer for the brand, but it’s coming at a time when sales of electric cars seem to be slowing down.

“I think the world is a little bit too impatient concerning electrification,” says de Meo. Analysts and media tend to lose a long-term vision. We have to keep a cool head here: there will be ups and downs, but we won’t go back to the ICE times, for sure.”

He continues: “Car manufacturers were criticized ten years ago if they didn’t follow the path of Tesla. Now, everybody is going full steam. For example, the other industry sectors have to catch up, the energy sector or the infrastructure.”

“With Ampere, Renault has taken advantage of a few years of other market players. Everybody is looking at 2035, when ICE in Europe has to disappear, but don’t forget the current ‘Cafe’ rules (Corporate Average Fuel Economy). Next year, we have to be under the bar of 100 g/km CO2; in 2030, it will be 50 g/km. To reach this, we will be forced to have already half of our production purely electric.

Is China a threat?

“It is my honest opinion that we don’t have to fight the Chinese; we can also make deals with them,” de Meo argues. “We did it already with Geely and Envision, and we have to think of how China can help us to decarbonize Europe quicker. And where cost is concerned, with our new R5 Electric, we master them and can be competitive, also with the Chinese.”

There is the example of Qualcomm. We have a partnership with them, and they deliver chips of the newest generation; we can even sell this to other manufacturers. Together, we have to create a European standard in the field of software. The Chinese will have one; we, Europeans, will have our own if we can understand each other.

What about fusions?

There have also been rumors lately about a possible merger between Renault and Stellantis or other big car companies looking around to absorb smaller ones. “In the car business, size matters, and mergers can be very healthy. But when the market is volatile, and technologies are evolving at warp speed, one has to be focused on innovation, like we are with Ampere.”

“Right now, Tesla has the financial power to buy, for example, Stellantis or Volkswagen. But they don’t. Why? Because it’s not that simple and maybe it’s not that interesting for the moment. We thought about going IPO with Ampere, but the market circumstances are not so good, and Renault has the cash to finance its electric arm until it breaks even (probably in 2025). It will cost us one or one and a half billion euros. But Renault can now do it without putting itself in danger.”

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