And then comes the renovation?
That will come with the arrival of new products. One of the things that we did, in my first six weeks, was reshuffle the whole product plan. We decided to kill maybe six or seven or eight projects, and to reinvent five or six, but centered in the segments and markets where I believe there are profits. The overall philosophy is to make more differentiation between Dacia and Renault.
Could you elaborate?
I would like to move Renault up a little bit [in market position], basically following what has taken place at PSA in the last five years. They have been much stronger in the C-segment [compact], where you have volume and margins at the same time. When you look at the profit pool worldwide, the C-segment is three times the B-segment [small]. On the other side, we want to allow Dacia to flourish as a full-fledged brand rather than a subbrand of Renault, because the brand has a lot of potential, and it's making a lot of money. It is relatively easy to sell because it has a very clear brand proposition: entry pricing in each segment.
Could you tell us which models you decided to discontinue and what was reinvented during those crucial six weeks?
We reinvented the next generation of our electric cars and added C-segment products on body styles that are, let’s say, naturally more inclined to call for a premium price, such as SUVs or crossovers. We killed attempts to create unnecessary proliferation of small cars in poor-margin markets around the globe.
Why did you reorganize Renault Group around brands instead of regions?
I have experienced the Volkswagen Group, and I know the benefit of putting a shirt with a certain color on people. Of course, you have to manage conflict between brands, but it creates a sense of belonging, and it orients all of the team to the outside, to competition, and to the market. The organization of Renault was very complex, with a lot of dimensions and matrixes. It was focused on functions, but people don’t buy functions, they buy brands.
What is the role of the overall Renault Group if you are now organized by brand?
I am trying to push the power in the brands. But I also want to have full end-to-end responsibility for some of the key functions. Before, some of this governance was intruded by the fact that you had the region in the middle. Now it’s organized so brands are responsible for the margins and the return on investment. The product planning division will tell them how many products they can have and in which segments.
So, product planning will tell Renault you will have, let's say, seven products, and you should have them in that segment or this segment, and you have your envelope of costs. On the other side, the brands face engineering, which is responsible for the content of the car based on the envelope of cost that is allocated by the brand for product, and the timing, which is very important. So the dialogue, or confrontation, happens between the people who are close to the market, the brands, and the engineers without anybody in the middle. The functions (on the group level), whether it’s quality, production, product direction, finance, etc. are all there to support this kind of dialogue. It will also bring the company much closer to the market and make everyone accountable.