French giant poised to close plants and simplify line-up as part of major initiative to turn around brand and stem losses
The Renault Group will slash its fixed costs by more than €2 billion (£1.7b) in the next three years, a move that will lead to the loss of more than 15,000 jobs worldwide.
The French firm recently posted heavy losses and says the “transformation plan” is needed to help it to weather both “the major crisis facing the automotive industry and the urgency of the ecological transition”. Key to the plan will be increasing efficiencies by simplifying processes and reducing components.
The Renault Group’s operations in France will be focused on developing “strategic business areas”, including electric and light commercial vehicles, the “circular economy” and new innovations.
The planned moves will lead to the loss of 4600 jobs in France and more than 10,000 other positions in the rest of the world over the next three years. The firm intends to reduce its fixed costs by 20% by 2024.
Renault: situation was already serious before pandemic
Chairman Jean-Dominique Senard claims the restructuring plan was already proposed before the coronavirus pandemic and the crisis has simply made it “more urgent”.
“Every decision, every measure for saving has been very thoroughly weighed up,” Senard said. “We have thought of our employees because we know these decisions affect them. We are doing it because we know these are the right decisions to make.
“The kind of crisis we have just come through forces us to act. The company can no longer take the weight of these expenses because of the collapse of the market.”
It comes ahead of the arrival of former Seat boss Luca de Meo as the firm’s new chief executive in July. It is understood by Autocar that de Meo is likely to unveil a stategic plan for the firm later this year and also decide on the future of the Alpine brand.
Senard said the renewed Renault-Nissan-Mitsubishi Alliance partnership was key to enabling the savings. He said: “The planned changes are fundamental to ensure the sustainability of the company and its development over the long term. It is collectively and with the support of our Alliance partners that we will be able to achieve our objectives and make Group Renault a major player in the automotive industry in the years ahead.”
The Renault Group’s plan includes saving €800 million (£710m) by improving production efficiencies and cutting engineering costs, in part through the adoption of the ‘leader-follower’ model recently announced by the Renault-Nissan-Mitsubishi Alliance. However, it will not engage in badge-engineered shared models.
That new Alliance agreement will also help the Renault Group to slash vehicle design and development costs and reduce the number of components used through increased levels of standardisation in its models. It said optimising production costs will save the firm €650m (£577m), while administrative costs will be reduced by €700m (£632m).
Renault to focus on profit over volume
As part of the Alliance agreement, each of the three firms will focus on key markets and model lines, with increased use of shared production. However, Senard pulled back on reports suggesting production of Renault’s SUVs will shift to Nissan’s Sunderland land in the future, claiming nothing had been decided.
It will also adopt increasing use of digitalisation in its new engineering projects, and ‘right-size’ industrial capacities with an adjustment of production. That will involve reducing the Renault Group’s global production capacity from four million vehicles to 3.3 million by 2024, focusing on “profit over volume”.
It has scrapped plans to expand the capacity of its plans in Morocco and Romania, will look to adapt the use of its plants in Russia – which also include Lada’s operations – and will study rationalising global gearbox manufacturing.
Renault is consulting on the future of its Douai, Maubeuge and Brittany plants in France, with the plan to create an “optimised’ centre of excellence for electric and light commercial vehicles.
It is also looking at the future of several other plants, confirming reports that it will stage an “open reflection” on converting the use of Alpine’s Dieppe plant once production of the A110 ends. However, Autocar understands that the future of the Alpine performance brand itself remains safe for the time being.
Renault has already confirmed plans to withdraw from its Chinese joint-venture operations. It will, however, continue its Formula 1 programme.
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