A logo of Groupe Renault stands outside its headquarters building on February 17, 2019 in Boulogne-Billancourt, near Paris, France.
Yuriko Nakao | Getty Images
Renault acknowledged that its global ambitions had been unrealistic, announcing plans to cut about 15,000 jobs, shrink production and restructure French plants as it pressed the reset button and sought to banish the specter of Carlos Ghosn.
Faced with a slump in demand that has been exacerbated by the coronavirus pandemic, Renault detailed plans on Friday to find 2 billion euros ($2.22 billion) in savings over the next three years.
“We thought too big in terms of sales,” said interim Chief Executive Clotilde Delbos, adding the company was “coming back to its bases” after investing and spending too much in recent years.
The French carmaker was under pressure even before Covid-19 hit, posting its first loss in a decade in 2019, and has said nothing would be “taboo” as it reviews its business.
It plans to trim its global capacity to 3.3 million vehicles in 2024 from 4 million now, focusing on its most profitable models and areas such as electric cars while freezing manufacturing expansion in countries like Romania.
Renault, like its Japanese alliance partner Nissan, is rowing back on an aggressive expansion plan pursued by Ghosn, its former boss-turned-fugitive, who is wanted on charges of financial misconduct in Tokyo. Ghosn denies the charges.
“The mindset has completely changed. The previous line was volumes and sales and being the first on the podium,” Delbos said. “We’re not looking to be on top of the world, what we want is a sustainable and profitable company.”
The company, due to bring ex-Volkswagen executive Luca de Meo on board as CEO in July, said it would cut costs by reducing the number of subcontractors in areas such as engineering and the number of components it uses, as well as shrinking gearbox manufacturing worldwide.
Delbos ruled out the need for a rights issue, saying Renault was close to sealing a 5 billion-euro credit line guaranteed by the French government.
Renault shares were down by 6% during early afternoon trade on Friday.
Third of cuts in France
Renault, which is 15% owned by the French state, faces the most sensitive restructuring measures in its home country, which will shoulder almost a third of the global job cuts and faces potential plant closures.
The carmaker said it was in talks with unions. Six sites out of Renault’s 14 plants in France – including a component factory in Brittany and the Dieppe factory where the group’s Alpine cars are made – will be under review, though most changes would take effect after 2022, Delbos said.
Some of the six plants like the one in Flins, close to Paris, where it makes its electric Zoe models, could cease to assemble cars and center on recycling activities instead, the company said.
Speaking to CNBC’s Charlotte Reed on Friday, Delbos said the French government wanted to work alongside the…
Go to the news source: Renault axes 15,000 jobs in cost-cutting reboot