Key Points

  • Renault will divide into five unique operations improving profitability and competitiveness
  • Splitting ICE and EV teams is the key strategy
  • Analysts concerned about complexity
  • Questions raised about future of Nissan alliance

Renault CEO Luca de Meo has announced the French carmaker will divide its operations into five independent businesses at its investor day.

Key to de Meo’s strategy is splitting internal combustion engine (Power) and electric vehicle operations (Ampere). In addition to separate units for sports cars (Alpine), recycling and mobility (The Future is Neutral), and financing (Mobilize) will emerge.

Renault says the goal is to boost profitability, improve efficiency and better compete in the industry by having distinct businesses – each with its own CEO and profit-loss accounts – and specialised teams leveraging external partners and investors.

Power – the combustion engine arm – will partner with Chinese auto-giant Geely in a 50-50 joint venture, while electric business Ampere has already partnered with computer chip manufacturer Qualcomm and Google for in-car Android Automotive tech.

“Renault hopes to win medals in those different sports instead of remaining at an average level in all five,” de Meo said.

Regarding its existing alliance with Nissan and Mitsubishi, inside sources told Reuters that Nissan is wary of sharing its technology with too many outsiders such as Geely, which also owns indirect rivals Volvo Cars, Polestar and Lotus.

But, de Meo said it will give a new perspective to the partnership, and said like marriage “it is important for us to have our own hobbies and our own life.”

However, analysts are concerned with the move as unclear and potentially adding complexity.

“The separation of combustion engine/electric operations is critical to the investment case, but the split into five different units… introduces undue complexity for governance and valuation,” Jefferies analyst, Philippe Houchois said.

Auto analyst at S&P Global, Romain Gillet, noted there was a lack of clarity in where cross-business operations – such as human resources and customer support – would fall in the five individual businesses.

In March, Ford announced a similar restructure to create two new divisions – Ford Blue for combustion engines and Ford Model E for electric vehicles – alongside Ford Pro which handles commercial and government vehicles in the USA.

Companies such as Volkswagen, Mercedes-Benz and Stellantis will not have separate EV entities.

Renault is gearing up release the second-gen Renault Kangoo E-Tech light commercial van and Megane E-Tech small crossover EVs in Australia next year via independent distributor Ateco.

COMMENTS

Keyword: Renault to split into five specialised businesses

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