Renault and Geely create engine technology supplier – 11.08.2022 at 09:41

(AOF) — Geely and Renault Group have signed a non-binding framework agreement to create a new global leader in the design, manufacture and supply of the best energy-efficient hybrid and thermal powertrains. The company will stay at parity. Once launched, the new company is expected to serve several industrial customers including Renault, Dacia, Geely Auto, Volvo Cars, Lynk & Co, Proton, as well as Nissan and Mitsubishi Motors Company. The partnership may subsequently supply powertrains to other manufacturers.

The new company is expected to operate 17 powertrain factories on 3 continents, employing around 19,000 people. Its total capacity will be 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 geographic presence of the combined company can provide solutions for 80% of the global ICE (internal combustion engine) market.

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


Key points

– The fourth largest car manufacturer in the world, established in 1898 and represented under the brands Renault, Dacia, LADA, Alpine and Mobilize;

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

– Business model: refocusing on mid-size cars, on the quality of the offer of electric or hybrid cars and flexible services;

– Equity of 15% (29.05% of voting rights) is owned by the French State, 15% by a Nissan subsidiary and 3.61% (5.88%) by employees, the 17-member board of directors is led by Jean-Dominique Senard, CEO executive director Luca de Meo;

– Strengthening the balance sheet: net debt reduced to 426 million euros, cash reached 15.8 billion euros.


– “Renaulution” strategy in 3 phases, whose goals will be updated in the autumn of 2022: revival until 2023: brand autonomy, rationalization of platforms from 6 to 3, “mid-range” offer increased to 40% of revenue from 15%, operating margin +3% , free self-financing of 3 billion euros / facelift from 2023 to 2025 by updating the range / facelift: expanding the use of hydrogen in professional vehicles with a target market share of 30% in 2030;

– Innovation strategy focused on communications, services and electric vehicles: network of experts, innovation labs (California, France, Israel), ReKnow University dedicated to electrification, data cybersecurity, etc. / partnerships: CEA and Moveo Competitiveness Clusters, Sysematic and ID4Car / NeVeOS project for car electronic architecture / 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 towards carbon neutrality by 2040 in Europe and by 2050 in the world: the goal of a number of all-electric private cars in Europe in 2030 with an investment of 23 billion euros by 2027 and 5 platforms/mobility of the circular economy based on the Flins plant;

– Positive impact of the product mix on revenue through the launch of Arkana, Jogger and Mégane Electric;

– To separate electrical and “software” activities listed on the stock market and thermal traction activities.


– Impact of semiconductor shortage: loss of 300,000 vehicles in 2022;

– the impact of commodity inflation is offset by commercial policy;

– Impact of the Russo-Ukrainian War: €2.3bn net loss from discontinued operations but debt reduction;

– Rapid launch of Mobilize, integrating mobility, energy, financing, insurance and maintenance services, with the goal of reaching 20% ​​of sales by 2030;

– After stable turnover and tripling, excluding Russian influence, net profit in 1 yr.


The targets for the 2022 semester have been revised upwards: operating self-financing +1.5 billion euros and operating margin +5%.

Paradoxical performance

EY data shows that the performance of the top 16 global manufacturers was particularly strong in 2021. Although the average margin declined 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 situation has been particularly tense for manufacturers facing unprecedented component shortages. Global sales fell 14% in 2020, the year of the health crisis, and recovered only 5% in 2021. Last year, however, players were able to take advantage of their fixed cost structure efforts.