Luca de Meo has pointed out that financial markets value companies in a very different way than the industrial sector does. In addition, the CEO of Renault has clarified the point at which the Alliance with Nissan is.
When Luca de Meo arrived at the Renault Group in January 2020, he did so with a clear objective in mind: to revive the company’s prestige and accounts and, in addition, prepare it for the transition to the electric car.
Since then, the Italian leader has been taking steps in that direction and, as he himself is in charge of recalling, in less than two years Renault has gone from losing 7.5 billion in the first half of 2020 to earn 888 million in 2021.
Along the way, various strategies included in the great project called Renewal and attempts have been made to tackle various crises revealed and/or arising as a result of the scandal involving Carlos Ghosn, his predecessor in office.
Renault-Nissan alliance, in danger?
Perhaps the most important crisis derived from that situation was the one between Nissan and Renault, two brands that have signed an alliance for years by which they collaborate in various aspects.
In recent months there has been much speculation about the breakup of the same or even the merger between the two brands, but Luca de Meo has clarified that it is most likely that none of these circumstances will occur.
“It is true that in the financial markets there is talk that Renault can sellthat it would be better for the action, that the Renault Nissan Alliance does not work”, he explains in a meeting with journalists within the event ChangeNow on climate change held in Paris.
«Synergies work especially if the technology is stable and the markets grow. This is not happening now: we are switching to electricity and becoming software companies while the markets fall, “laments the Italian leader.
«For the market it is easy, we sell our participation in Nissan and then, what happens? De Meo refers to the joint developments and joint platforms that in that case would be undone, which would mean a double cost for both brands»clarifies.
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A scenario that, obviously, Renault does not want to assume at a time of strong investment as a result of the market’s commitment to the electrified car.
“I just got back from Japan, where I went to try to rebuild the alliance. The markets insist that it doesn’t work because we are not a company. Renault and Nissan have structured their organizations for years to reach a merger. However, when I arrived in July 2020, the only executive who knew how both companies work was José Vicente de los Mozos (Renault Group’s global manufacturing director),” reveals Luca de Meo.
“So I don’t think Renault and Nissan will ever merge, but what is going to exist is a collaboration like now. The first thing was to lower the tension. We are two companies that respect each other. And we have shown them projects that are even more favorable for Nissan, ”he says.
Renault and Russia
Another issue that Luca de Meo discussed in his meeting with the press is the group’s departure from Russia after the country’s invasion of Ukraine that began last February.
Luca de Meo is clear that his “Priority is to make Renault profitable. What we don’t, we eliminate. The departure from Russia is already done. It is the best solution to insure part of the 45,000 workers that we had there.”
“A month ago they told us why we didn’t do it. Now why did we do it? Entering a country is easier than leaving. When the crisis broke we kept producing and ‘burning’ money, but you cannot invest because there is an economic blockade, which means that you are going bankrupt. Hence coming out with an unconditional purchase option for the next six years is the best solution,” he says.
The market value of Renault
Finally, Luca de Meo referred to the complexity of finding profitability in the financial markets, even citing as an example a brand with a lot of stock market prestige which, however, has not yet started selling any cars.
“The value of the share is extremely low. We don’t need more investment between now and 2025, but we do need investment from then on for the projects that will take us to 2030. The financial markets do not think with the same logic as the industrial. A company that has not sold a car is worth three times more than Renault”, recalls Luca de Meo, clearly alluding to the company founded by Robert Scaringe.
“I know the game is changing and we need to convince investors that we are attractive. We have proven to have a solid transition to the electric vehiclewith projects such as the second life of batteries that are already a reality”, reiterates Luca de Meo.
Source: The world
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Photos: Renault Press