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Half a year after taking office at Renault, CEO Luca de Meo has presented a new strategy for the car company.

"Renaulution" is what the former Seat boss calls the concept immodest.

The main aim is to make the manufacturer and its alliance with Nissan and Mitsubishi profitable again.

To do this, de Meo is changing the structure of the company - and is saying goodbye to the old goal of his predecessor Carlos Ghosn of wanting to be among the world's best in terms of sales figures.

“We have grown bigger, but not better,” de Meo criticized the old “volume mantra” when he presented his new plans.

In fact, under Ghosn's leadership, the group had once risen to become the largest automaker in the world.

But those times are long gone.

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In the meantime, the manufacturer is groaning under high costs that can hardly be covered with the sales proceeds of its mostly small cars.

After the severe slump in sales due to the corona pandemic, the factories are no longer fully utilized.

In order to increase margins again, De Meo wants to shift the focus of the product portfolio into higher segments.

He wanted to go back to a mix like the one in the 1990s when he started his career at Renault, he said.

At that time, the manufacturer had significantly more large cars on offer, today small cars like Clio and Zoe dominate.

This overlaps the brand with its sister company Dacia - too many vehicles are in comparable price segments.

That should change by 2025.

Renault plans to bring seven new mid-range models onto the market by then, two of which are all-electric vehicles.

De Meo's goal is to achieve 45 percent of sales in the middle class in four years.

Father of the new Cinquecento

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However, the Renault boss did not show what these cars would look like at his presentation.

Instead, he presented the prototype of a new, electric version of the classic Renault 5.

The car will come on the market at a price that many can afford.

“We will make electric cars popular,” promised de Meo.

With the re-edition of a classic he already had success in his time as a manager at Fiat, at that time he brought the new version of the Fiat Cinquecento (500) onto the market.

He can also pursue the concept of his own brand for sporty cars at Renault: the Alpine sports car line appears as a separate label.

Just as the Seat Cupra line was developed into its own brand under de Meo.

In general, the individual brands should have more room for maneuver.

To this end, the country organizations are largely deprived of power and the heads of Dacia / Lada, Alpine and the mobility services division Mobilize are strengthened.

This should make the organization less complex.

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Technically, all brands use the same platforms and components, the number of engine families is to be halved from eight today to four by 2025.

In addition to two electric drives, which can also be operated in combination with a fuel cell, there is also a diesel engine for light commercial vehicles and a gasoline engine, which can be offered in various hybrid versions.

The hybrids in particular are currently costing manufacturers a lot of money - and are generating a comparatively low margin.

This is already different with purely electric cars.

Renault's small e-cars like the Zoe are already as profitable as comparable combustion models.

In three years' time, according to the forecast, they will have clearly outperformed the combustion engines in terms of margins.

And the costs for the Stromer will continue to fall.

Renault has agreed with its suppliers to reduce costs by 600 euros per vehicle by 2023, said de Meo.

The current austerity program for fixed costs, which should fall by two billion euros by next year, could possibly be completed this year.

Daring to forego market share

In addition, costs are expected to drop by a further billion by 2025.

The number of jobs that will be deleted remains at the already announced 15,000.

As part of the program, Renault will reduce its production capacity to 3.1 million vehicles per year.

This roughly corresponds to the sharp drop in sales last year.

On the stock exchange, the price of Renault shares collapsed during the presentation, but then recovered to the level of the previous day.

“Ultimately, Renault is a pure mass manufacturer, with the low-cost suppliers Dacia and Lada behind them.

I think it's risky to forego market share, ”said NordLB analyst Frank Schwope.

De Meo tries anyway.

Also at the subsidiary Dacia, which should move closer together with the Russian brand Lada.

Both providers have an extremely high share in the private customer market, they produce in Russia, Romania and Morocco at a quarter of the labor costs of Western Europe and have plant utilization of more than 90 percent.

Dacia boss Denis le Vot wants to expand these advantages further by building all vehicles on the same technical platform in the future.

In addition, mid-range vehicles from both brands are expected to come onto the market in 2025 that are above the previous product range.

CEO de Meo in a double-breasted suit with a Megane eVision

Source: AFP via Getty Images

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The average prices of Dacia are expected to rise by 30 percent with the upcoming models, thereby opening up new customer groups for the manufacturer.

Le Vot showed a Dacia SUV concept vehicle with an electric drive.

When it comes to software, the most exciting topic of the future in the auto industry, Renault is taking a different path than its competitors in Germany.

What is clear is that cars are turning into moving computers much faster than has long been waited for.

The technical lead of Tesla is mainly due to the better programs and the more modern computer technology.

VW, BMW and Mercedes develop their own software solutions

To catch up with these innovations, Renault, together with other large groups in France, founded the Software-République initiative.

Among others, the Orange mobile phone company, the Atos IT service provider and the Dassault armaments company will be there;

Start-ups are also involved.

Continental supervisory board chairman Wolfgang Reitzle had just called for a similar merger in “Spiegel”.

He argued that the industry could only compete with the IT giants from China and the USA if they worked together.

But in this country it doesn't look like it.

On the contrary: Volkswagen is currently building its own large car software organization, which is to develop its own car operating system with thousands of programmers.

BMW and Daimler are also developing the software for their cars on their own.

The two companies had ended a joint project on this.

They also invest large sums in entertainment and control programs for users.

Mercedes-Benz just presented its new, huge display for the upcoming luxury electric vehicle EQS at the CES technology fair - with an assistance system that uses artificial intelligence to adapt to the user and his needs.

Renault, on the other hand, will save such development costs.

The manufacturer will no longer build the on-board entertainment and information system itself. In the Megane E, which will be launched on the market next year, the on-board system will run for the first time with software from the US Internet giant Google.

So far, only small niche providers like the Volvo subsidiary Polestar had allowed the Android Auto programs in their cars.

Renault is now the first mass manufacturer to connect with the software world from Google.

How you can save money with a Tesla

The entry into the era of the electric car is more attractive than ever for buyers in Germany.

This applies to both the purchase of a new vehicle and the tariffs in the motor vehicle insurance.

Source: WORLD / Sebastian Struwe