Can Renault CEO save the "stalled" Kering by shifting from automobiles to luxury goods?

On Monday, shares of the French luxury goods group Kering (开云集团) surged over 10% in European markets, while shares of the French automaker Renault fell more than 6%. The reason is reports that Renault's current CEO Luca de Meo will take over as the new CEO of Kering.

Renault confirmed on Sunday evening that de Meo will officially leave in mid-July this year, stating that he will "embrace new challenges outside the automotive industry."

According to media reports, de Meo will succeed the current CEO of Kering, Francois-Henri Pinault. Notably, Pinault is a member of the founding family of Kering and has led the company for 20 years. After stepping down as CEO, Pinault will continue to serve as the chairman of the group's board, maintaining control over the company's overall direction.

Insiders say that Kering is expected to officially announce this significant personnel change after the market closes on Monday.

Analysts say, if the news is true, de Meo's appointment will mark a significant shift for Kering. This is because Kering has been trying to revitalize its core brand Gucci in recent years, but with little success, and the reform plans have failed to impress the capital markets, leading to a lack of market confidence.

De Meo is seen as a "firefighter" figure

De Meo, 58, was born in Milan, the fashion capital of Italy.

He studied business administration at the prestigious Bocconi University in Italy and chose to enter the automotive industry after graduation, working in the field for over 30 years.

In the early 1990s, he started at Renault, stepping into the automotive industry. By the late 1990s, he moved to Toyota Europe, continuing to delve into the field he loves.

In 2002, de Meo joined the Italian car manufacturer Fiat Group, where he began managing multiple brands. Here, he achieved two remarkable successes: he masterminded the relaunch of the "Fiat 500" city car and successfully revitalized the Abarth brand.

From 2009 to 2020, de Meo worked at Volkswagen Group as the marketing director. This role included not only the Volkswagen brand itself but also covered the entire group.

In 2012, he was promoted to a board member of Audi, a premium brand under Volkswagen, responsible for global sales and marketing.

From November 2015 to January 2020, de Meo served as the chairman of SEAT, a Spanish brand under Volkswagen Group. Under his leadership, SEAT saw a sales rebound, enhancing the brand's status and importance within the Volkswagen Group.

He has also been a supervisory board member of Ducati and Lamborghini and served as the chairman of the board for Volkswagen Group's Spanish division, accumulating more management experience with high-end brands.

He jumped from Volkswagen Group to Renault in 2020, at a time when the pandemic severely impacted the global automotive market, and Renault faced its worst losses in history. After taking office, he quickly launched bold reforms, including large-scale cost reductions, global layoffs, and capacity cuts, transforming Renault into a smaller but more agile company. In addition, he successfully improved the long-standing tense cooperation between Renault and Nissan.

In just five years, he successfully led this struggling French car company through a deep transformation, not only reshaping the 20-year strategic alliance between Renault and Nissan but also firmly advancing hybrid and electric vehicle strategies, pulling Renault back from the depths hit hard by the pandemic. The French government currently still holds a 15% stake in Renault.

Citibank analysts stated, "de Meo is seen as the key figure in Renault's transformation, helping the company restore growth and profitability through the launch of new products, driving technological innovation, accelerating the transition to electric vehicles, and enhancing brand positioning."

Bernstein analyst Luca Solca commented, "Brand management and marketing are de Meo's strengths, which are at the core of the luxury goods industry. He also seems to have a great passion for this industry. It is easy to imagine that de Meo would find the opportunities at Kering very attractive."

Kering also needs its own "turnaround"

Under the long-term leadership of current CEO Pinault, Kering has transformed from a diversified group into a company focused on luxury goods, experiencing a period of brilliant growth, with Gucci being Kering's "cash cow," still the largest source of revenue and profit.

However, the problem is that since the pandemic, Kering has not been able to truly revitalize the brand vitality of Gucci. More seriously, the group once had debts exceeding 10 billion euros. According to media reports last month, this has put Kering at risk of a further downgrade in its credit rating.

Citibank analyst Thomas Chauvet stated, "Considering the current unclear recovery prospects for Gucci, we believe it is not yet the time to be bullish on Kering. There is still a lot of work to be done in the future."

Meanwhile, sources revealed that a meeting originally scheduled for Monday between Kering and analysts has been canceled, with no reason given.

The exodus of top executives in the automotive industry

De Meo's departure also marks the exit of the second top CEO in the European automotive industry within six months. Previously, Stellantis CEO Carlos Tavares also announced his resignation.

Currently, European car companies are facing multiple pressures. On one hand, there are export barriers due to the Trump administration's increased tariffs on automobiles, and on the other hand, competition among car companies is becoming increasingly fierce