French car maker Renault splits in five businesses to boost profit

French car maker Renault announced a major overhaul that will see it separate its activities in five businesses, deepen ties with China's Geely and spin off its electric vehicles unit through a stock market listing next year.

At a long-awaited investor presentation on Tuesday, Renault said it targeted operating margins of 8 per cent for 2025 and rising to more than 10 per cent in 2030, from 5 per cent expected this year.

It also plans to reinstate dividends from 2023 after a three-year hiatus, and generate more than €2 billion of cash annually between 2023-25, growing to more than €3 billion in the following five years.

An early mover in the electric car race, Renault has fallen behind newer, more agile rivals like Tesla. After needing emergency state cash during the Covid pandemic, the group is looking to extend on a turnaround following losses in 2019 and 2020, and increase the valuation of its different parts.

But big question marks remain on its strained relationship with long-standing Japanese partner Nissan, as Renault looks for other outside investors for each of its divisions.

The main plank of the car maker’s strategy is separating its combustion engine business — which will partner with Geely in a 50-50 joint venture, also announced on Tuesday—from its electric vehicle unit, to be listed in the second half of next year.

Nissan may take a stake in the EV venture, codenamed “Ampere”, alongside other investors, though Renault will keep a majority stake.

Renault CEO Luca de Meo said the group wanted to give the alliance a strong future and a “new chance”. But he also said that — as in a marriage — “it is important for us to have our own hobbies and our own life.”

The companies had initially set a November 15 target to reach a deal, but no announcement is now expected on that date, according to people familiar with the talks.

Aside from the Ampere EV unit and the combustion engine division, Renault will have three more businesses.