PARIS (Reuters) -Incoming Renault CEO Francois Provost will take the helm of the French automaker at a time when it is beginning to show cracks in its recent success, revising down its full year
What are the main issues facing new Renault CEO Provost?
Challenges Facing Renault's New Leadership
PARIS (Reuters) -Incoming Renault CEO Francois Provost will take the helm of the French automaker at a time when it is beginning to show cracks in its recent success, revising down its full year profit forecast earlier this month due to weaker sales volumes.
Increased Competition
Below are some of the challenges ahead for Provost when he takes over on Thursday.
Dependence on European Market
TOUGHER COMPETITION
Investment Grade Goals
While Renault has been largely protected from U.S. tariffs because it does not sell in the United States, it has been indirectly hit by increased commercial pressure as European competitors looking for new markets outside the U.S. step up efforts to sell in the French firm's home region.
Nissan Relationship
The company reported zero growth in second quarter sales volumes, and warned of weak sales performance in June.
It is also facing rising competition from Chinese entrants, both in electric vehicles and hybrids.
Analysts at Barclays say Renault may have seen slower price-mix momentum in the first half of the year. The company is scheduled to report full results for the first half on Thursday.
DEPENDENCY ON EUROPE AND CARS
With sluggish growth in Europe where Renault sells more than 70% of its cars, it needs to expand in emerging markets. It has already outlined plans to invest 3 billion euros ($3.4 billion) to launch eight new models under the Renault brand for non-European markets by 2027.
It will also target developing less cyclical businesses beyond autos, such as EV charging and financial services, as part of a mid-term strategy which former CEO Luca de Meo had aimed to unveil later this year.
TOO SMALL, LESS INDEPENDENT
Conscious that its small size does not allow it to fund the development of electrified and autonomous vehicles, Renault has set up numerous partnerships, including with China's Geely in Korea and in combustion and hybrid engines around the world, and with Volvo Group in electric vans.
However, this strategy has raised concerns among unions that the company could lose its in-house know-how and its independence. Renault, ranking only 15th in volumes globally, is frequently the subject of rumours of a tie-up with larger peer Stellantis.
Partnerships with Geely also have some worried about potential leverage by China, though Renault's main shareholder, the French state, says the tie-ups do not compromise the company's ability to remain independent.
A HIGH PACE OF LAUNCHES
Under de Meo, Renault launched one of the biggest product renewals in its history, with a record 10 launches and two facelifts last year.
It is planning another seven launches and two facelifts in 2025, including of the Renault 4 and the Dacia Bigster, and eight more in 2026, according to sources familiar with the matter.
Key to increasing market share, new launches also require significant investment in marketing and industrial fine-tuning to deliver cars on time, at the right quality.
VAN WOES
A leader in Europe's high profit commercial vehicles market, Renault's van sales plunged by 29% in the first half due to a softer economy, and an overhaul of its models and product offering.
GETTING BACK TO INVESTMENT GRADE
One of Renault's top priorities is to get its credit rating back to investment grade to attract new investors, while also boosting its market cap, currently only at 10 billion euros versus Stellantis' 23 billion euros.
Renault's debt is rated Ba1 by Moody's and BB+ by S&P Global, one notch below investment grade.
NISSAN
Since starting to rebalance its partnership with Nissan in early 2023, Renault has done three share sales, and reduced its stake in its Japanese partner to 35.7% (17.05% held directly and 18.66% via a trust).
It will need to find the right time to sell more, made more challenging by Nissan's financial and operational difficulties.
It will also play a role in Nissan's overhaul, particularly if the Japanese company decides to sign a strategic partnership with another manufacturer. Renault opposed recent plans for a tie-up with Honda because it considered the financial terms were not generous enough.
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(Reporting by Gilles Guillaume; Editing by Dominique Patton and Emelia Sithole-Matarise)
