On June 15, Renault announced that its CEO Luca de Meo will step down effective July 15. This is not a retirement. He will take the helm of French group Kering, which owns famous fashion brands Gucci, Balenciaga, Yves Saint Laurent, Brioni and others. Why would a luxury company from the world of fashion need the experience of a top manager from the world of automobiles?

Restart

The formal answer to this question is that everywhere you need managers who know how to restart a business, making it more profitable or ensuring sales growth;

Luca de Meo will be the first outside executive hired in Kering's history. François-Henri Pinault has led the company since 2005, serving as chairman and CEO;

The group has more than 10 luxury brands in its portfolio, but Gucci is still the main one. In 2024, it accounted for just under half of total revenue (€7.65 billion).

In the COVID-19 pandemic and after, Kering was forced to limit the Italian fashion house's activity (it reduced the number of collections and models) and buy new fashion houses to build revenue. The acquisition of 30% in Valentino in 2023, with the option to buy the entire fashion house, is the latest major deal. However, it led to a rise in corporate debt in 2024 to €10.5 billion from €8.5 billion in 2023. In October 2024, S&P downgraded the company's long-term credit rating from A- to BBB+ with a stable outlook due to worse-than-forecast Q3 sales. In May 2025, Reuters wrote about the risk of another downgrade of Kering's credit rating.

The future head of the fashion empire, Luca de Meo, has already faced such challenges in his career. From November 2015 to January 2020, he was responsible for the Spanish Seat brand at Volkswagen. The cars under this brand were like a suitcase without a handle for the German company: it's a pity to give up, but you also want to recoup the costs of maintaining production. Under him, sales of this brand increased almost one and a half times - from 390.5 thousand in 2014 to 574.1 thousand in 2019. De Meo's decision was to develop the Cupra brand. Previously, it was a model in Seat's lineup, and he decided to separate it into a separate brand. These are models with a bright design, a sporty image, in the lineup there are also electric cars. Externally, they are radically different from the previous Seat, which were essentially copies of utilitarian Skoda and VW models. In 2023, the company eventually announced the discontinuation of the Seat - buyers opted for the Cupra.

At that time, Luca de Meo had already been working at Renault for three years, where he launched the Renaulution strategy. Its essence is that it is not only the total output figures that matter, but also profit maximization. He demanded that the lineup of affordable Dacia models get attractive design and new versions and continue to be interesting to those who consciously choose budget cars. Renault is developing a line of electric cars, as well as relaunching old "hits". In 2024, buyers were offered a new version of the Renault 5, it was an iconic model in the 1970s. For those looking for sport and exclusivity, Luca de Meo offered an Alpine-branded coupe, developed in the 2010s. At first it was a limited edition customized, but de facto it's now a serialized story: in 2018, its first full year of sales, the company produced 195 cars; in 2024, 4,600 cars will be sold).

The result of de Meo's strategy: in the fall of 2024, Renault was one of the few major automakers not to issue an annual profit warning. Its stock price has increased by about 90% over the past five years, the best performance among automakers in Europe. Over the same period, market rival Stellantis is up 15% and VW has lost 38% of its capitalization.

Bargain hunters

All of the above shows the importance of choosing a strategy that guarantees growth, but does not answer the question of why a luxury company should hire a manager from a car factory. To understand this, we need to shift the focus from production to sales mechanisms - marketing.

Modernity poses the same challenge to automakers and couturiers: to ensure that new generations are interested in their products. The younger (even in relative terms) these generations of buyers are, the more effort it takes to get a person to become your customer and client. Part of this is due to changing consumer behavior: a new car or expensive accessory is not as important to them as it was to their parents. Partly it's a matter of income; consumers are looking for more sustainable or affordable things, even if it's a couture item. In addition, car manufacturers, just like fashion houses, become hostage to earlier marketing decisions and at a certain point have to change them 180 degrees;

You can be a fan of Dior's black clutch, but without a beach collection or a men's almost sporty suit for the current season, the famous brand cannot increase sales. In the same way, you don't want to be a keeper of Porsche traditions and at the same time look for a way out of the alarming state of affairs every day: your customers of 911 model are already over 50 years old on average, and you would like to increase the share of customers aged 40+. And then the manufacturer of sports coupe "betrays history" and produces SUV Cayenne. It is not so sporty, but this way you can attract customers at least ten years younger, because they will be able to buy a car not as "a friend of daddy's". The bonus is more second and third purchases, and increased interest in the carmaker's new products.

Even more similarities between the auto and fashion worlds can be found if we examine the cultural and ethical dominants. In both the automotive and fashion businesses, customers are persuaded of ethical production, the use of recycled materials, low carbon footprints, and so on. It would seem that it makes no difference who sewed the upholstery for the chair or did the stitching on the pants. But first companies accustomed consumers to the fact that it is important, and then the latter decided that here you can look for the ground for comparison, whose goods are better and whose are worse. As a result, both fashion goods and automobiles today are sold by marketing that comes before consumer features.

De Meo has worked for years in an industry that has had to adapt to the fact that consumers aged 30+ don't want to overpay, care about ethics and demand the brand's style. And any fashion house will meet them with the same set of consumer demands: they want less flashiness, but at the same time the current colors. Novelties should be according to the current fashion, but is it possible to make it so that things from past collections do not go out of fashion as quickly as Zara collections change each other. Is it possible to make youth things, and next to leave the "classics" of the brand, so that there was something to give to mom. And it would also be nice to release nostalgic sneakers or windbreaker, similar to those that were on display in the 90s.

Even the promotional tools are similar. Yes, Vogue magazine is still with us, but luxury buyers are more likely to make decisions with the support of opinion leaders on Youtube, Instagram, TikTok and so on. And automakers are at least keeping pace with fashion houses here. Athletes and musicians, popular characters or charismatics who "break through" on the platforms of mobile applications are the faces of brands everywhere. BMW is no stranger to selling customers T-shirts and bags with its logos and orders background music for new models from composer Hans Zimmer ("Rain Man", "Inception", "The Lion King");

It seems that the Pinault family decided that the Renault helmsman knows how to manage this set of requests and tools as well as classical managers of the fashion industry. And so they decided to make a non-standard transfer in order to win back customers and reduce debt.

 

 

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