Groupe Renault - 2020 Universal Registration Document

102 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2020 Find out more at group.renault.com 01 INTERNAL CONTROL AND RISK MANAGEMENT GROUPE RENAULT Risks related to strategy 1.5.2.1 Risk of inadequate performance by the Alliance - high risk with impact > probability The Group’s membership of the Renault-Nissan-Mitsubishi Alliance brings a major contribution to the success of the Group and its strategic plan. In the context of its members’ deteriorating financial performance and the global health crisis, the Alliance’s member companies have focused their strategy on efficiency and competitiveness rather than volumes. This situation, in the context of the Alliance governance in place since March 2019 (see Chapter 1.2.3 of this Document), could result in a risk of insufficient performance due to reduced or less optimal sharing within the Alliance of platforms, technologies and, more generally, the investments necessary for the development of product ranges, which would jeopardize the future competitiveness of the Group’s offering and the achievement of its revenues and earnings targets. In addition, the product cycle and the transition towards the end of diesel could also result in a decline in business volumes between Nissan and Renault. Lastly, Nissan’s financial position could limit the distribution of dividends to the Group for this year, as was the case in 2020. Risk management The Alliance Operating Board (AOB), created on March 12, 2019, is responsible for operational coordination between Renault, Nissan and Mitsubishi Motors and for new initiatives creating value for their respective shareholders and employees. On May 27, 2020, the Alliance announced the new cooperation business model in order to improve the competitiveness and profitability of its three member companies. Alliance partners use the leader-follower model to enhance the efficiency and competitiveness of vehicles and technologies. Each member becomes a reference in the regions where it has the best strategic assets, and acts as a facilitator and provider of support for the competitiveness of the other members. The announcement of the upcoming launch of the MEGANE eVision on the shared CMF-EV platform also used by Nissan is an illustration of essential synergies and joint developments. In addition, under the new strategic plan announced on January 14, 2021, the aim is to derive 80% of the Group’s volumes from three Alliance platforms. Alliance members ensure they are always at the forefront of the industry in terms of their performance, products, technologies and markets, while continuing to benefit from joint purchasing and development. Risk of insufficient response to a disruption of existing activities - medium risk The proportion of business carried out by digital means is steadily increasing and could lead to the disruption of existing activities by favoring disintermediation through the arrival of new players attracted by the direct contact with customers. This trend is emerging in businesses linked to new mobility (car-sharing, connected services, etc .), but also in existing and traditional sectors of sales of services or automotive products, sales and after-sales, used vehicles and sales financing, which represent a significant part of our profitability (the contribution of the Sales Financing operational segment to Groupe Renault’s consolidated net income is a profit of €789 million in 2020). The different forms of lockdown related to the COVID-19 pandemic have only reinforced this. The risk for Groupe Renault is that part of its business or value chain may be captured by these new players (which may come from the world of technology), positioning themselves between Groupe Renault and its customers. Risk management Groupe Renault has always paid close attention to customer relations, both directly and through its subsidiary RCI Banque, which has direct and regular contact with its customers. In addition, on September 3, 2020, Groupe Renault announced its reorganization around its brands into four Business Units (see section 1.1.3), each of which will focus on value creation and concentrate resources on market segments and associated customer expectations. Specific action plans have been put in place by the after-sales business line, RCI Banque and Mobility Services to reduce the risk of disintermediation in the medium term. The aim is to propose innovative offers to customers, including new mobility services in order to increase contact with customers throughout the vehicle’s life cycle. The Group is also pursuing its digital transformation, notably through its subsidiary Renault Digital, in order to develop the agile tools and organizations needed to be competitive. Risk of insufficient capacity to develop new businesses - medium risk Against a background of deep and sustained transformation in demand and the mobility offerings, in line with societal changes and environmental and climate issues, Groupe Renault could be faced with an inadequate ability, within a given timeframe, to change its business model, to anticipate and adapt to changes and possible disruptions of markets, mobility offers and related value chains, and thus to develop new business. This could lead to lower revenues than the objectives over the affected portions of the Group’s commercial offering, as a result of a lack of innovation and inadequate preparation for its future, beyond the deadlines of the current strategic plan. Risk management The Group’s strategic plan aims to make this risk an opportunity by mobilizing (if necessary through the use of new organizations) the resources of the Group, the Alliance, RCI Banque, targeted partnerships and acquisitions, so as to structure a strong and innovative sustainable, electric, autonomous and connected mobility offer. These innovative service offerings will be housed within the automotive brands, but also within the new Mobilize Business Unit, whose scope goes beyond the traditional framework. The recent decision to create this Business Unit paves the way for the future: Groupe Renault is aiming to derive more than 20% of its revenues from new businesses by 2030. The November 25, 2020 announcement of the Re-Factory project in Flins, Europe's first circular economy plant dedicated to mobility, is another example of the ongoing transformation into innovative offers.