Renault moves closer to price equalization of its competitors
CEO Luca de Meo often says his mission within the Renault group is to create “value for volume” at the automaker, which had pursued ambitious sales targets around the world under the leadership of its CEO longtime Carlos Ghosn.
This mission is now at least partly completed.
The automaker saw a record first-half net price increase of 8.7% and 11.5% in the second quarter alone, compared to the first quarter of 2019, as measured by the impact on revenue.
Prices contributed 1.36 billion euros ($ 1.6 billion) to the 4.46 billion euros increase in automotive sales for the Renault group, the largest “bucket” outside of market growth due to improving economic conditions. A similar measure, the product mix, contributed 453 million euros.
There are other signs of progress at Renault, which lost a record € 8 billion in the first half of 2020 (largely due to losses at Nissan and associated companies), including the reduction in fixed costs of 1.8 billion euros since 2019, in engineering, production and selling costs, general and administrative costs (SG&A).
But for a product and marketing specialist such as de Meo, who brought the reborn Fiat 500 to the Italian brand’s market and then gave the Spanish brand of VW Seat a makeover, pricing is the cornerstone. profits and brand image.
“The price is the brightest point,” said Deputy Managing Director and Chief Financial Officer Clotilde Delbos. “This is the result of the commercial policy of our Renaulution plan.”
Other automakers follow a similar recipe. Stellantis CEO Carlos Tavares focused on meeting and exceeding price benchmarks for Peugeot and Opel / Vauxhall brands, for example; and Renault Nissan’s alliance partner is hoping to do the same.
In fact, Renault uses Peugeot as a price benchmark, de Meo said.