2 O 22 COST REDUCTION PROJECT MAY 29, 2020 Renault Confidential C - - PowerPoint PPT Presentation

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2 O 22 COST REDUCTION PROJECT MAY 29, 2020 Renault Confidential C - - PowerPoint PPT Presentation

2 O 22 COST REDUCTION PROJECT MAY 29, 2020 Renault Confidential C DISCLAIMER Information contained within this document may contain forward looking statements. Although the Company considers that such information and statements are based on


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SLIDE 1

Renault Confidential C

2O22

COST REDUCTION PROJECT

MAY 29, 2020

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SLIDE 2

Renault Confidential C 2

DISCLAIMER

Information contained within this document may contain forward looking statements. Although the Company considers that such information and statements are based on reasonable assumptions taken on the date of this report, due to their nature, they can be risky and uncertain (as described in the Renault Registration Document filed with the French Autorité des Marchés Financiers). Actual results may differ materially from those projected or implied in these forward looking statements. These forward looking statements are made as of the date of this presentation. Renault does not undertake to provide updates or revisions, should any new statements and information be available, should any new specific events occur or for any other reason. Renault makes no representation, declaration or warranty as regards the accuracy, exhaustiveness, adequacy, effectiveness and genuineness of any statements and information contained in this report. This information does not constitute an invitation to invest in shares or constitute or form a part of any offer for the sale

  • r subscription of, or any offer to buy or subscribe for, any securities or other financial instruments.

Further information on Renault can be found on Renault’s web site (www.group.renault.com), in the section Finance/Regulated Information.”

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SLIDE 3

Renault Confidential C 3

AGENDA

Building a resilient performance

2o22 fixed cost reduction project

01

Alliance as a performance enhancer of Groupe Renault

Zoom on new projects and associated benefits

02

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SLIDE 4

Renault Confidential C 4

AGENDA

Building a resilient performance

2o22 fixed cost reduction project

01

Alliance as a performance enhancer of Groupe Renault

Zoom on new projects and associated benefits

02

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SLIDE 5

Renault Confidential C 5

A CHANGE OF PRIORITIES: TOWARDS BETTER PERFORMANCE

OUTCOME STRATEGIC FOCUS Inability to generate cash Over-sized structure Size Innovation

Restore competitiveness

Profitability

  • ver volume

Increase efficiency

Trim down diversity

Optimize

  • rganization

Leaner structure

Customer focused – leverage of Alliance – rigorous approach REDUCED FIXED COSTS

> €2bn by 2022 vs 2019

Performance 2020+ OUTCOME 2020

  • 2017

MINDSET BUSINESS FOCUS ACTION PLANS Fixed costs too high

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SLIDE 6

Renault Confidential C 6

NEW LEADERSHIP NEW MINDSET FACT BASED SELF-HELP RESILIENCE

A NEW MINDSET FOR A BETTER RESILIENCE

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SLIDE 7

Renault Confidential C 7

PARADIGM SHIFT AT RENAULT: PROFITABILITY OVER VOLUME FIRST PRIORITY: REDUCE FIXED COSTS

LOWER DEPENDENCY ON VOLUMES & IMPROVED COMPETITIVENESS ENHANCED PROFITABILITY

FIXED COSTS

2o22 PLAN FOCUS ON GOING EFFORT

VARIABLE COSTS

PRICING DISCIPLINE

  • 20%

2019 - 2022

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SLIDE 8

Renault Confidential C 8

2o22 PROJECT: OVER €2bn CASH COST REDUCTION VERSUS 2019

  • 1. Execution of the € 2bn reduction plan does not rely on new Alliance projects or external factors like market growth
  • 2. Includes production labor cost savings

~€700m ~€800m ~€650m

>€2bn

in 2022 vs 2019 w/o CAPEX

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SLIDE 9

Renault Confidential C 9

ENGINEERING: IMPROVED EFFICIENCY

~€800m

COST REDUCTION in 2022 vs 2019

LINE-UP

▪ Optimization ▪ Reduced parts diversity ▪ Increased commonalization

ORGANIZATION

▪ Subcontractor base rationalization ▪ Increase in RTX1 utilization ▪ Rationalized structure ▪ Digitalization of validation

  • 1. Regional Technical Centers
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Renault Confidential C 10

DIVERSITY REDUCTION: VERSIONS, PARTS, POWERTRAINS PRODUCT DEFINITION Less part references1 per vehicle in plant Powertrain commonalization within the Alliance

  • 1. Part reference = part number.
  • 25%

by 2022

vs 2019

85%

by 2022

+10 pts vs 2019

ENGINEERING LINE-UP ORGANIZATION

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SLIDE 11

Renault Confidential C 11

FEWER PC1 PLATFORMS TO DEVELOP IN 2022 & MORE VEHICLES PER PLATFORM BY 2026

DEVELOPMENT COSTS DOWN VEHICLES PER PLATFORM UP Active PF

(requiring development)

Mature PF

(already developed)

13 13 # platforms > 600k units / year1 3 3 ALL

4 9 4 2019 2022

2019-2022 Platform transition 2022-2026 Platform evolution

5 4 4 2026

4

1. Passenger cars, platforms including partners’ volumes

ENGINEERING LINE-UP ORGANIZATION

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Renault Confidential C 12

C/D A/B LCV EV

2019 2020 2021 2022

K-ZE

Arkana New Clio Triber New Captur XM3 Zoe LCV

SIMPLIFICATION BUT NOT AT THE EXPENSE OF THE PRODUCT CADENCE

ENGINEERING LINE-UP ORGANIZATION

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SLIDE 13

Renault Confidential C 13

WORK ORGANIZATION: LEVERAGE REGIONAL FOOTPRINT ENGINEERING EFFICIENCY Increased RTx1 use

40%

RTx

2019

60%

RTx

2022

Skills and resources

Focus France

Core technologies High added-value

Top 9

subcontractors

2019

Top 4

subcontractors

2022

Subcontractor base rationalization

80%

  • f business with
  • 1. Regional Technical Centers

ENGINEERING LINE-UP ORGANIZATION

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SLIDE 14

Renault Confidential C 14

PRODUCTION: CAPACITY RIGHTSIZING, ENHANCED EFFICIENCY

~€650m

COST REDUCTION in 2022 vs 2019

PERFORMANCE & CAPACITY RIGHTSIZING

▪ Industry 4.0 ▪ Lines/plants rightsizing ▪ Supply chain efficiency ▪ Labor savings

PROCESS ENGINEERING

▪ Performance “best in class” ▪ Subcontractors rationalization ▪ Digitalization of prototype process ▪ Maximization of 3D Printing

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SLIDE 15

Renault Confidential C 15

INNOVATION: BOOSTING INDUSTRIAL PERFORMANCE PERFORMANCE GAINS

2019

Competitiveness & Industry 4.0

80

Veh/employee

2022

91

Veh/employee

+14%

Digitalization prototype process Maximization of 3D Printing

PRODUCTION PERFORMANCE FOOTPRINT

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Renault Confidential C 16

3.3 3.8 4.3 4.8 5.3 5.8

CAPACITY RIGHTSIZING

2022 2019 2024

Capacity

3 shifts x 5 days

Capacity

Harbour standard Group Production

2019

  • 1. including AVTOVAZ & JVs, w/o Renault Nissan Automotive India Private Limited

Groupe Renault capacity evolution

Vehicle production and max capacity (in Million veh)1

3.8

3.6 4.0 3.3 5.5 6.0 4.9 ~ -18%

2024 vs 2019

~ -10%

2022 vs 2019

PRODUCTION PERFORMANCE FOOTPRINT

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Renault Confidential C 17

GLOBAL RIGHTSIZING PROJECT

Capacity rightsizing 2019-2024

Potentially impacted locations

PRODUCTION PERFORMANCE FOOTPRINT

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SLIDE 18

Renault Confidential C 18

ADAPTING OVERALL STRUCTURE TO RESTORE COMPETITIVENESS

~€700m

COST REDUCTION in 2022 vs 2019

FIXED MARKETING EXPENSES

▪ Digitalization and media efficiency ▪ Media cost optimization ▪ Scope adjustments

G&A

▪ Cross function approach ▪ Optimization ▪ Downsizing ▪ Shared service centers expansion

SG&A

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SLIDE 19

Renault Confidential C 19

TIMELINE OF CASH IMPACTS

30% 75% 100% 30% 50% 20% 2020 2021 2022

% of the >€2bn fixed cost gains achieved versus 2019 €1,2bn cash restructuring costs timing

Ramp-up of Group cash savings & implementation costs

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SLIDE 20

Renault Confidential C 20

SCOPE ADJUSTMENTS: CAPITAL ALLOCATION OPTIMIZATION

>€500m

RRG GROUP

▪ Assets reduction (real estate

and working capital)

▪ Variable costs vs fixed costs

NEW FOCUS IN CHINA

▪ Transfer of DRAC shares

to Dongfeng

▪ Re-focusing on EVs and LCVs

Capital allocated to low-return business in 2022 vs 2019

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Renault Confidential C 21

PEAK PASSED FOR INVESTMENT BUT NOT FOR DEPRECIATION

2021 2019 2018 2015 2016 2017 2020 2022 Capex & R&D cash spending Amortization and depreciation in COP Capex + R&D in % of Group Revenues 10.7% ~8%

6.0bn 4.7bn 2.9bn 3.7bn

  • 2.5 pts

RD&CAPEX

in 2022 vs 2019

+€0.8bn

DEPRECIATION

7.9%

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Renault Confidential C 22

WRAP-UP: FIXED COST REDUCTION BY NATURE BY 2022

Labor costs

~ 15 000 positions worldwide potentially impacted

Outsourcing

  • ptimization

Marketing & Others

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SLIDE 23

Renault Confidential C 23

Building a resilient performance

2o22 fixed cost reduction project

01

Alliance as a performance enhancer of Groupe Renault

Zoom on new projects and associated benefits

02

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SLIDE 24

Renault Confidential C 24

ALLIANCE NEW COLLABORATION SCOPE BEYOND OUR FIXED COST REDUCTION PLAN

REGIONS

(REFERENCE PLAYER BY REGION) NEW

CURRENT ALLIANCE SCOPE NEW ALLIANCE COLLABORATION SCOPE BEYOND 2o22 PLAN WITHIN 2o22 PLAN

PLATFORMS & POWERTRAINS TECHNOLOGY PURCHASING

SCOPE EXTENSION TO FULL VEHICLE

LEADER / FOLLOWER

PLATFORMS & POWERTRAINS

SCOPE EXTENSION

LEADER / FOLLOWER

TECHNOLOGY

INCREASED STANDARDIZATION

NEW PARTNERSHIPS

PURCHASING

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Renault Confidential C 25

SIGNIFICANT BENEFITS FROM NEW COLLABORATION SCOPE

Up to -40%

Model investment1

LEADER FOLLOWER EXAMPLE EXAMPLE OF BENEFITS New opportunities for Fixed costs gains

Under

100$/kWh

VEHICLE PURCHASING REGIONS

B-SUV

Next Generation

Renault reference player

Europe, Russia, Latam

EV Battery

Standardization: Geometry & chemistry, design, carry-across

1. Model investment = R&D + Tooling 2. Core system of electric-electronic

Nissan Development

TECHNOLOGY

Autonomous driving Renault Development e-Body architecture2

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SLIDE 26

Renault Confidential C

2O22

COST REDUCTION PROJECT

MAY 29, 2020