Renault and Geely create an engine technology supplier – 08/11/2022 at 09:41

(AOF) – Geely and Renault Group have signed a non-binding framework agreement aimed at creating a new world leader to develop, produce and supply the best energy-efficient hybrid and thermal powertrains. The company will be held at parity. When launched, the new company is expected to supply several industrial customers, including Renault, Dacia, Geely Auto, Volvo Cars, Lynk & Co, Proton, as well as Nissan and Mitsubishi Motors Company. The partnership could subsequently supply powertrains to other manufacturers.

The new company is expected to operate 17 powertrain mechanical plants on 3 continents, employing a total of approximately 19,000 people. It will have a combined capacity of more than 5 million transmissions and internal combustion engines, hybrids and plug-in hybrids per year to serve more than 130 countries and regions.

The combined product portfolio of Geely and Renault Group and the geographical footprint of the combined company could provide solutions for 80% of the global ICE (internal combustion engine) market.

This framework agreement should lead to the finalization of the project in 2023.


Key points

– Fourth largest automobile manufacturer in the world, created in 1898 and present under the Renault, Dacia, LADA, Alpine and Mobilize brands;

– Global industrial positioning, with a turnover of €46.2 billion achieved for more than 50% outside Europe and with strong positions mainly in the following countries: France, Italy, Turkey, Spain, Belgium-Luxembourg, Romania, Morocco and Poland;

– Business model: repositioning on medium-sized vehicles, on the quality of the offer in electric or hybrid vehicles and flexible services;

– Capital held at 15% (29.05% of voting rights) by the French State, at 15% by the subsidiary Nissan, and at 3.61% (5.88%) by the employees, the board of directors of 17 members being chaired by Jean-Dominique Senard, Luca de Meo being Chief Executive Officer;

– Strengthened balance sheet with net debt reduced to €426m, cash reaching €15.8bn.


– “Renaulution” strategy in 3 stages, whose objectives will be updated in the fall of 2022: resurrection until 2023: brand autonomy, rationalization of platforms from 6 to 3, “mid-range” offer increased to 40% revenue against 15%, operating margin of +3%, free self-financing of €3 billion / renovation from 2023 to 2025 by renewing the ranges / renaulution: ramping up of the use of hydrogen in professional vehicles with a market share target of 30% in 2030;

– Innovation strategy focused on connectivity, services and electric vehicles: network of experts, innovation labs (California, France, Israel), ReKnow University dedicated to electrification, data cybersecurity, etc. / partnerships: CEA and the Moveo, Sysematic and ID4Car competitiveness clusters / NeVeOS project for the electronic architecture of vehicles / E-TECH hybrid technology and French carbon-free batteries / Renault Venture Kapital and Alliance Ventures investment funds for venture capital and support for start-ups;

– Environmental strategy aiming for carbon neutrality in 2040 in Europe and in 2050 in the world: objective of a range of all-electric private vehicles in Europe in 2030 via €23 billion of investments by 2027 and 5 common platforms / circular economy mobility driven by the Flins plant;

– Positive product mix effect for revenue with the launch of Arkana, Jogger and Mégane Electric;

– Towards the spin-off of electrical and “software” activities, which would be listed on the stock market, and thermal traction activities.


– Impact of lack of semiconductors: loss of 300,000 vehicles in 2022;

– Impact of raw materials inflation offset by commercial policy;

– Impact of the Russia-Ukraine war: net loss of €2.3bn from discontinued operations but debt reduction;

– Operational launch of Mobilize, bringing together mobility, energy, financing, insurance and maintenance services, targeting 20% ​​of sales by 2030;

– After stable turnover and a tripling, excluding the Russian impact, of net profit in 1


semester, 2022 targets revised upwards: operating self-financing of +€1.5 billion and operating margin of +5%.

A paradoxical performance

Data from EY highlights that the performance of the world’s top 16 manufacturers was particularly strong in 2021. While the average margin has fallen for three years in a row, from 6.3% in 2017 to just 3.5% in 2020 , this margin stood at 8.5% in 2021. This level is a record for ten years. However, the context was particularly hectic for manufacturers, faced with unprecedented shortages of components. Global sales fell 14% in 2020, the year of the health crisis, to rebound by only 5% in 2021. However, last year, players were able to reap the benefits of their efforts on their fixed cost structure. .


Leave a Comment