Pivoting the business model to tech, energy and mobility by 2025.*
Groupe Renault with sales at 2.95 million units, down -21.3%, had a net loss of -€8.5 Billion ($9.7 billion) during 2020 compared to a profit of €19 million in 2019 as Covid ravaged its results. Japanese partner Nissan – it holds a 43% share – contributed €4.9 billion of the loss. Group revenues were down -21.7% at €43.5 billion or -18.2% at constant exchange rates. Group revenues, however, were down -8.9% in total during Q3 and Q4, which if Covid ever abates provides a glimmer of a possible recovery. Another indicator – Group operating margin of -€337 million (-0.8% of revenues) was positive at €866 million (3.5% of revenues) in H2.
The disastrous results take into account an increase of charges related to restructuring costs and impairments of almost a €1 billion. Net income of -€8,046 million (-€660 million in H2) compared to €19 million in 2019. However, a negative Automotive operational free cash flow of -€4,551 million is distressing even with a positive contribution of €1,824 million in H2.
“The results for the second half of 2020 (Group operating margin at 3.5% and positive order accutane 40 mg Automotive operational free cash flow) mark the first step in the Group’s recovery. The achievement of 60% of the €2 billion savings plan objectives right from the first year (compared with 30% announced), together with the implementation of the new commercial policy of the “Renaulution” strategic plan largely contributed to these results.,” said Renault.
Renault added “in accordance with the “*Renaulution” plan, the Group will continue the implementation of the actions aiming at its recovery and confirms the 2023 objectives communicated during the plan presentation.”
*Renaulution
This recovery plan has 3 phases that are launched in parallel:
- “Resurrection”, running up to 2023, will focus on margin and cash generation recovery,
- “Renovation”, spanning up to 2025, will see renewed and enriched line-ups, feeding brand’s profitability,
- “Revolution” from 2025 and onward, will pivot the business model to tech, energy and mobility; making Groupe Renault a front-runner in the value chain of new mobility.
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The Software République is a response to the profound changes in mobility. Mobility has never evolved as fast as it has in recent years, with the diversification of business models, and offers in terms of connectivity, de-carbonization and multi-modality. And we are only at the beginning. The global mobility market is expected to grow by 60% by 2035 to reach €11,000 billion1. How do we explain this growth? Mainly by the emergence of technological breakthroughs (electric vehicles, new components, new services, etc.), requiring the development of new software and systems.
Competitiveness and Sovereignty
The United States and China have already understood this and have embarked on enhanced integration strategies. These fall into two categories. On the one hand, there is Tesla’s “vertical integration” strategy, with the ambition of controlling the entire core of the vehicle, including batteries and software. On the other hand, there are groups of Chinese automotive and technology companies engaged in horizontal integration strategies to offer competitive smart mobility solutions.
This is the context of the Software République, whose objective is to structure a new development sector for software dedicated to mobility This horizontal integration strategy is a response both to Renault’s competitiveness and, more broadly, to the need for France and Europe to build a sustainable ecosystem in this field.
The Software République designates a group of partners representing each of the bricks or “skills” to develop software innovations for mobility. The partners include five founding members: Atos, Dassault Systèmes, Groupe Renault, STMicroelectronics and Thales. These founding partners will provide the skills needed to develop technological and software innovations for mobility. The combination of all our skills will accelerate the implementation and marketing of these innovations.
The name “Software République” is self-evident: Software, because it involves developing software in three main areas: vehicle systems, systems for mobility and energy ecosystems. All of this is based on key technological enablers such as artificial intelligence, cybersecurity, specialized electronics, big data and digital simulation.
République, to designate its functioning as an ecosystem. More precisely, it is an open innovation approach between complementary partners (large companies, start-ups, universities, research centers, public authorities, etc.) to co-develop new innovative solutions and new services.
Ultimately, these software and solutions developed within the Software République will be aimed at mobility service operators (private companies or public authorities), enabling them to develop offers that facilitate accessibility to territories and improve the experience of citizens as well as energy management.”
Among the first concrete examples of solutions under discussion with partners, “Plug&Charge” aims to simplify electric charging through the development of new technologies and services. This system will allow a car, plugged into any compatible charging station, to be recognized so that payment for the charge is made automatically. The Software République is also currently working on flow simulation to facilitate access to and exchange of mobility information, in an instantaneous and open way on a territorial scale, in order to provide solutions to improve traffic flow, reduce traffic jams, lost time and CO2 emissions.
Research and Development
To understand the place and role of each person in the Software République, its functioning can be summarized as follows:
• A group of founding members, who define the strategy and prioritize the technological solutions to be developed.
• Specific cooperation, to help mobility technology providers emerge, by jointly developing and marketing new technological solutions.
• An incubator to develop the most innovative start-ups in mobility technology.
• An investment fund specialized in mobility technology, to finance the most promising start-ups.
• A research institute, to promote exchanges between industry and academia.
François Dossa is a member of the Groupe Renault Management Committee in charge of Open Innovation Projects – editor
1 Source : Boston Consulting Group
Renault announces the successful sale of its entire stake in Daimler AG (i.e. 16,448,378 shares representing 1.54% of the share capital of Daimler) at a price of €69.50 per share, a total amount of c. €1.143 billion, through a placement to qualified investors, as defined in Article 2 point (e) of Regulation (EU) 2017/1129, as amended, by way of an accelerated bookbuilding process. The proceeds of this sale will allow the Renault Group to accelerate the financial de-leveraging of its Automotive activity. The industrial partnership between the Renault Group and Daimler remains unchanged and is not impacted by this financial transaction[1].
Settlement of the Offering should take place on 16 March 2021 at the latest. Daimler’s shares are listed on the regulated markets of Stuttgart and Frankfurt (ISIN code: DE0007100000).
1. ^ Except for the waiver (to ensure reciprocity among the two companies) of the obligation for Daimler to propose first to Renault to acquire its shares in case of a sale through a capital markets transaction.