PARIS – The Renault brand will shift its focus toward more-profitable compact segment vehicles rather than small cars, which now make up 70 percent of its sales, new CEO Luca de Meo said.
De Meo, who took over as head of Renault Group on July 1 after running Volkswagen Group Spanish brand Seat, said the compact segments have become Europe’s “center of gravity,” and that Renault would bring out a new range of those vehicles around the end of 2022, including a compact full-electric SUV on a platform optimized for batteries.
De Meo will unveil a new strategic plan for Renault at the beginning of 2021, but he offered hints of his thinking on Thursday on Renault’s first-half financial results webcast, at which the automaker announced a record loss of $8 billion. He said he and Renault executives had made more product decisions in the previous four weeks than in the past two years.
“I'm a product guy, so I think that the first thing I had to attack was the product portfolio,” de Meo said. “In a very short time, we have have substantially reworked the product plan to put our money on more profitable and growing segments.”
That means the compact, or C, segments, he said. Renault’s fundamental shortcoming in its lineup is the product mix, especially when compared to rival PSA Group, he said. Renault will focus on returning to “our position in the heart of the European market, on the center of gravity that is right now in the C and C plus segments.”
De Meo recalled that when he left Renault 23 years ago the automaker had just launched its successful compact Megane/Scenic range. “That changed the company, and we have to do the same,” he said.
"We can't do 70 percent of our volumes in small cars," de Meo said. "This is pretty dangerous."
Renault is the European leader in the small-car segments with the Clio hatchback and Captur SUVs, but has struggled against compact competition such as the VW Golf and Ford Focus hatchbacks, and VW Tiguan and Peugeot 3008 SUVs.
The Renault Megane ranked eighth among compact cars in 2019, with 128,659 sales, according to figures from JATO Dynamics, trailing the No. 1 Golf at 349,868 sales. In the compact SUV segment, the Renault Kadjar ranked seventh, with 111,120 sales, compared with the No. 1 Tiguan at 223,059 sales.
As part of a 2 billion euro cost-cutting plan, Renault will reduce its model range by 20 percent. Among them could be slow-selling compact and midsize vehicles, including the Scenic and Grand Scenic compact minivans, the Espace midsize minivan, and the Talisman midsize sedan.
The first step in revamping Renault’s lineup is assembling what de Meo called a “superstar team” of designers, including Gilles Vidal from Peugeot and Alejandro Mesonero-Romanos from Seat.
“Design is one of the biggest reasons to buy a car, so we want to be very strong on that,” he said. “It gives us a chance to differentiate between brands,” he added.
De Meo said he sees broad potential to give Renault’s budget brand Dacia a stronger identity, and said that while sports car maker Alpine was likely to remain a niche brand, it showed Renault’s ability to create emotions, and could probably be leveraged better. “In my world," he said, "emotions mean pricing power.”