The management of Groupe Renault is considering splitting up the group in order to separate the thermal and electrical activities. The aim would be to have more impact on the stock markets with the entity dedicated to electricity.
Renault is clearly not having a great year. However, the French group definitely needed to raise the bar after a complicated period following the departure of Carlos Ghosn who smashed the diamond, but there isn’t one. The first quarter results published this morning are bright red: – 17.1% of sales and – 2.7% of sales† Today, the contrast between the two French auto giants, the former PSA group and Renault, is striking: the former is currently on the water with record profitability and a good rise since the merger with FCA. when the second tries to minimize damage and losses . But Renault could have a solution this year with the split of the group into two very different entities.† A choice that arises with some other major car players: Ford, Porsche.
Renault split in two to make money
Luca de Meo recently confirmed that the project was indeed under discussion internally. The idea would indeed be to split the electric part of Renault and everything related to heat engines. Ford has recently confirmed this, but for Renault it remains to be seen: according to Le Monde, Renault should not formalize the new divorce before the autumn and an investor meeting. For the CEO of Renault, it is clear that the visibility of the “electric” Renault is not good: “the current structure of the company does not make visible from the outside the value of the companies that exist within. Renault less than 7 billion capitalization, I think it’s not the value we deserve†
A split would allow Renault to list its new “electric” entity on the stock exchange to better value it. And with investors increasingly favoring stock market investments that are focused on the future and all things sustainability and ecology, the potential for such an action would be greater than that of a Renault combining all its activities.
The example of Ford and Porsche?
Ford recently confirmed the division of the brand into two: Model e and Blue† The first only deals with everything to do with electricity and the second is limited to combustion engines, which remain important in many markets. On the Porsche side, the project is not yet fully validated, but we seem to be heading for a split with the Volkswagn Group. Again, a financial markets story: Porsche alone in the stock market would have a greater impact than dilution in VAG. Finally, let’s take the example of Volvo. The owner Geely has set up a joint venture managed with Volvo called Aurobay, which only manages gearboxes, engines and hybridization. In the long term, Volvo will therefore only be concerned with electricity.
And why not sell the Nissan shares…
The other idea of saving the coffers of a Renault that really needs it during this period of financial difficulties would be to sell shares in Nissan. A project that is not really new and that pops up from time to time, especially since Renault owns 43% of Nissan for a total of more than 1.8 billion shares† The diamond manufacturer could then recover hundreds of millions of euros from this resale, which would have two possible outlets: Nissan, first, which would not be against the takeover of part of its capital, and a third, which would then show interest in increasing to the capital of the Japanese brand.
