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STRATEGY

On February 13, 2014 Carlos Ghosn, Chairman and CEO of Renault draw a mid term conclusion of Renault strategic plan. Renault exceeded its 2011-2013 objective and delivered € 2.5 billion in cumulative free cash flow.
The group has set new ambitious yet realistic targets to be reached by the end of the plan “Drive the Change” to be measured in 2017:
- To generate 50 billion  euros in consolidated turnover
- To reach an operating margin greater than 5% of turnover with a positive free cash flow each year.

2011 – 2013 Achievements 

Renault Drive The Change

  o   Success of new Renault and Dacia models

 

The renewal of the Renault model line-up is off to a strong start: New Clio is number 1 in France and number 3 in Europe. Captur is the leading-selling cross-over in France and segment leader in Europe. Pioneering in zero-emission mobility, Renault delivered its commitment to launch a comprehensive range of electric vehicles.

 

o   A better balanced geographic footprint

 

The Renault group increased its market share outside Europe. The mix of non-European sales increased from 38% in 2010 to 50% in 2013. Brazil and Russia became respectively the second and third largest markets for the company. Led by Duster, the company’s most-sold vehicle in 2013, the unique M0 range has been the driving force behind the strong growth in emerging markets.

 


2014 – 2016 action plans 

 o   A sustained renewal and expansion of the product line-up

 

The Renault group is going to accelerate the renewal and expansion of its product line-up starting in the fall of 2014 with the launch of an all-new Twingo and Trafic van. These will be followed by the successors of Espace, Megane, Scenic and a new D sedan which will all share the new alliance 3 million CMF C-D platforms.

 

Simultaneously, the group is going to extend its market coverage with a complete line-up of cross-over vehicles, an A-entry vehicle designed for India and South America as well as new pick-up trucks for emerging markets.

  

o   International expansion and renewed growth in Europe

 

Following a successful first phase, the group is aiming at capturing more than 8% market share in Brazil and Russia and 5% in India.

China will become a top priority in the coming years with the construction of a new plant in Wuhan with an initial capacity of 150,000 units, designed to produce C and D segment cross-overs.

 

In Europe, Renault is aiming at recapturing second place among the mass-market brands with a renewed line-up of connected, user-friendly and environmentally responsible vehicles. At the same time, the Dacia brand will sustain its undisputed leadership in its category.

 

o   Improved competitiveness

 

The Renault group will enjoy the benefits of scale and improved competitiveness as a result of sharing alliance platforms and modules (CMF) on which more than 80% of future vehicles will be based. Standardized modules will account for two thirds of the value of future vehicles, up from one third today.

 

The localization of parts and components will increase in order to make better use of the company’s global manufacturing footprint and contain costs.

 

During the period, the company will also benefit from the effects of the competitiveness plans signed in France and Spain as well as manufacturing vehicles for partners.

 

By completion of the plan, the group will reach a capacity utilization rate of 100% in Europe (based on 2 shifts/day standard definition).

 

o   Alliance synergies

 

Increase synergies from the Alliance will contribute to improving Renault’s profitability. The convergence projects recently announced in purchasing, engineering, manufacturing and supply chain, and human resources will generate a minimum of € 4.3 billion by the end of 2016.

 

o   Cost containment

 

The strategy of sharing costs across the Alliance and with partners will allow Renault to sustain a high level of upstream development, while maintaining a ratio of R&D and CAPEX below 9% of group turnover.


Action plans to deliver two critical objectives 

By the end of the plan, the Renault group aims to deliver two critical objectives [1]:

 

Deliver € 50 billion [2] in consolidated group turnover at the current scope of consolidation. Group turnover includes sales of vehicles and parts, associated services and business with partners.

 

Deliver a sustained level of profitability by achieving an operating profit margin of at least 5% of group turnover, while achieving a positive free cash flow each year.



[1] Measured in 2017, first year with Plan full effect. Without AVTOVAZ consolidation.

[2]  Based on bank consensus FX rates at the beginning of 2014.