Renault CEO Carlos Ghosn has laid out a relatively conservative strategy that counts on volume growth in international markets while reducing the automaker's reliance on Europe to drive profits until 2022.
Under the new plan, called Drive the Future, Ghosn is aiming for annual group revenues to reach 70 billion euros -- a 40 percent gain over 2016 -- with an average operating profit of 7 percent, compared with 6.4 percent in 2016. He will reach those targets by increasing volume 40 percent to 5 million vehicles annually from sales of Renault, Dacia and Lada models, with 60 percent of all sales coming internationally, including an increase in Chinese sales to 550,000 annually.
Last year Renault sold 35,000 vehicles in China. "It's a plan of growth," Ghosn said last month. "Drive the Future is about building up profitable and sustainable worldwide growth that is geographically well distributed and balanced between market segments."
Europe will recede in importance, though it will remain a "profit pillar," Renault says. Sales here are expected to be flat over the course of the plan, at 1.8 million units annually, and models sold in Europe will have higher-cost features to meet stringent emissions standards and advanced driver-assistance systems.
"If you don't have growth in other regions, you can't finance the technology in Europe," said Ronan Noizet, senior analyst for European light vehicle production at IHS Markit in Paris. Renault will also double its battery-electric vehicle offering to eight and plans to electrify half its lineup with hybrid technology. At the same time, it will simplify its internal combustion engine lineup by reducing the number of diesel engine families to one.
At a time when the auto industry is facing a period of sharp change to offer autonomous, electric and connected vehicles in the future, Ghosn is amplifying Renault's current strategy rather than taking the company in a radically new direction, analysts said. That is a reflection of Renault's earlier investments in electrification and operations in high-risk/high-reward markets such as Russia, India and Brazil, they said.