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Renault’s low-cost gearbox strategy powers hybrid success in Europe, outpacing competitors in a tough EV market

The low-price gearbox technology Renault has engineered is giving the French automaker an edge in Europe's increasingly enormous hybrid car market. As the industry struggles to navigate a transition to electric vehicles, it offers some room for maneuver for Renault.

Despite an impending ban on combustion engine cars in the EU by 2035, demand for pricey EVs remains weak across Europe, putting pressure on automakers. However, Renault, which lost its shirts in 2020, continues to do well in the hybrid segment, the latter referring to cars that incorporate a thermal engine and an electric one.

Renault's sales of hybrid models, from Clio to Captur, have gone up by 55 per cent in the first eight months of 2024 compared with the same time last year. This was a 21.1 per cent greater growth in hybrid sales in the EU, according to the European Automobile Manufacturers' Association, ACEA. For Renault, this positioned it as Europe's second-largest hybrid player after Toyota.

According to a statement given by analysts at Stifel, “Renault seems to be doing very, very well.” This statement comes after the carmaker reaffirmed its business targets on October 8. Unlike many of its peers, Renault did not adjust its forecasts amid tough market conditions. The analysts further added, “We think the company is simply more versatile and agile than its peers.”

The E-Tech system is a simplified 'dog clutch' gearbox technology that is now in development based on Renault's recent success. In the real sense, the benefit of this innovative design is to require fewer components and to be lighter and cheaper in production. It could apply to all Renault models to contribute to the company's competitive edge in hybrid vehicles.

As per a statement by Philippe Houchois, an analyst at Jefferies, “Renault is particularly at ease in balancing between battery electric vehicles and hybrid transmissions compared with its competitors.” Renault shares have risen by 6.4% in 2024, contrasting with a 12% decline for the European auto share index.

Yet, it is far from over. For Renault, however, needs to knock down the CO2 emissions to satisfy the more stringent 2025 standards set by the EU. The hybrid models would help Renault, but the EVs would also need to rise from a current 12% of sales to nearly 20% levels to meet regulatory requirements.

Renault will release a new electric SUV, the Renault 4, at the Paris Auto Show in October as part of efforts to bolster its EV lineup following the launch of Renault 5. “The key will also be the success of the launches of both the R5 and R4,” S&P Global analyst Antoine Giraud said