In a major reconstruction, Renault announced its cost-cutting plan on Friday which will cut nearly 15,000 jobs. This will include 4,600 at its core French operations and about 10,000 worldwide. This plan aims to regain its footing in the wake of plummeting car sales and the shift to electric vehicles.
“In a context of uncertainty and complexity, this project is vital to guarantee a solid and sustainable performance,” interim CEO Clotilde Delbos said in a statement.
The cost-cutting plan, which was unveiled to labor representatives, Thursday, aims to reduce overheads by two billion Euros ($2.2 billion) over the next three years.
Renault further added, “Our four production sites in France could be closed or restructured and the factory at Flins northwest of Paris will stop making the Zoe electric hatchback from 2024.”
An additional 10,000 jobs will be cut outside France, with expansion plans now halted in Morocco and Romania, and under review in Russia. Overall, Renault’s production capacity will shrink to 3.3 million vehicles over the next four years, from four million currently.
“We want to generate economies of scale to restore our overall profitability and ensure our development in France and internationally,” Delbos said.
Renault came into the coronavirus crisis in particularly bad shape: Its alliance with Nissan and Mitsubishi has struggled since the 2018 arrest of its longtime star CEO Carlos Ghosn. This exposed deep rifts in its alliance with the said companies.
After Ghosn’s ouster, his successor Thierry Bollore was forced out, in turn, a few months later, as former Michelin chief Jean-Dominique Senard was brought in to chart a new course for the carmaker and repair the fractured alliance.
“The planned changes are fundamental to ensure the sustainability of the company,” Senard said in a statement on Friday.
Though the company hired former Volkswagen executive Luca de Meo to take over as CEO, he will not be able to start his work until July because of a non-compete clause.
Last year, Renault recorded its first annual loss in a decade, at 141 million euros. The French government is its single biggest shareholder with a 15-per cent stake and has been in talks on a 5 billion-euro loan guarantee. Finance Minister Bruno Le Maire earlier this week that the group’s survival is at stake.
The company said, “The difficulties encountered by the group, the major crisis facing the automotive industry, and the urgency of the ecological transition are all imperatives that are driving the company to accelerate its transformation,” the statement said.
The group, which employs 180,000 workers worldwide, announced the suspension of planned capacity increase projects in Morocco and Romania.
The group is also considering “adaptation” of its production capacities in Russia and announced the halt of Renault-branded oil-powered car activities in China.
On Thursday, Nissan unveiled huge job cuts and the closure of its factory in Barcelona. The UK plant, in Sunderland, would remain open, the Japanese company said.
The company is slashing costs by cutting the number of subcontractors in areas such as engineering, reducing the number of components it uses, freezing expansion plans in Romania and Morocco and shrinking gearbox manufacturing worldwide.
Renault’s interim chief executive Ms. Delbos said during a press conference on Friday: “We have to change our mindset. We’re not looking to be on top of the world, what we want is a sustainable and profitable company.”
Renault, which claims more than 4% of the global car market, said its plans would affect about 10% of its 179,000-strong global workforce and cost up to €1.2bn (£1.1bn).