Renault ready to sell the thermal engines division to Geely and Aramco

Renault ready to sell the thermal engines division to Geely and Aramco

The Chinese carmaker and the Saudi oil company are about to acquire 60% of the company’s shares which will collect plants and employees engaged in the construction of petrol, diesel and hybrid powertrains. The announcement of the definitive electric breakthrough for the French company is expected in the autumn

Gianluigi Giannetti

After the first rumors collected by the Reuters agency, the confirmations arrive on the day of September 1 by the French newspaper Le Monde. The anticipated reorganization of Renault is set to become much deeper than expected, with the breezy division of the group into two distinct companies in a rather short time. The French company would keep for itself the activities related to the electric car business, but would hand over control of the division into which the production of traditional and hybrid combustion engines will flow. According to Le Monde, the Chinese automotive group Geely should enter the latter with 40% and the Saudi oil company Aramco with 20%. For now, Renault has announced that it will not comment on the rumors in any way, but that negotiations with potential partners are indeed underway. Le Monde has a different opinion, which goes so far as to confirm that the French government, which holds 12% of Renault’s shares, has already been informed of Aramco’s involvement.

Warm autumn

Analysts expect Luca de Meo to be very sensitive in explaining the restructuring plan, presumably on the occasion of the annual Capital Markets Day, in the autumn. To anticipate the number one of the group, however, thought the Reuters agency, which has already designed the physiognomy of the new company as divided into two distinct entities, each with about 10,000 employees. The operations of the electrical division are expected to be based in the north of France, where Renault is converting existing plants into centers for the production of batteries and zero-impact vehicles. The prospect is naturally that of a clear separation of this industrial entity and therefore a placement on the stock exchange as early as 2023. The fate of the second division, destined to collect infrastructures and 10,000 employees involved in the construction of traditional and hybrid internal combustion engines, is quite different. . The plants concerned are in Spain, Portugal, Romania, Turkey and Latin America. In this sector, Renault would therefore intend to liquidate its direct shareholding, transferring a total of 60% of the shares to new partners. Reuters had anticipated the name of Geely, which would receive 40%, already included in the European car that counts with the ownership of the Volvo and Lotus brands, in addition to the significant controlling stake in Mercedes and 50% of Smart. Le Monde subsequently also brought to the fore the possible participation for a 20% of Aramco, which we remember as the company with the largest capitalization in the world, corresponding to 2,200 billion dollars.

breaking point

It is still too early to evaluate the possible synergies between Geely and the newly controlled ex-Renault engine division, as well as to consider the impact of Aramco in the diffusion of solutions based on hydrogen obtained from petroleum. It helps to consider that currently, in the first six to seven months of 2022, the Renault group’s best-selling car in Europe is Dacia Sandero, equipped with traditional and bifuel petrol / LPG engines. More immediate for De Meo will be the commitment to manage the position of Nissan, an ally since 1999 and linked by a series of share crossings. In fact, Renault holds 43% of the Japanese manufacturer’s capital with full voting rights, while the Japanese brand holds 15% of the House of the lozenge, without voting rights. A set-up that has always been considered unbalanced and that can now be definitively questioned, considering how Nissan has leaked that it has no interest in acquiring shares in the new former Renault engine division, and therefore indirectly asks to be compensated with a cash equivalent. or a greater stake in the new division dedicated to electricity. All this, with a collaboration plan that binds Renault, Nissan and Mitsubishi to make 80% of their respective models on shared mechanical platforms by 2026, but which at this point legitimizes the current absence of common plans for 2030.

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