Lots of movement in the Renault-Nissan-Mitsubishi Alliance lately, what with the reveal of a new business strategy and Nissan both posting severe losses and releasing a teaser of 12 forthcoming models.
Now it’s Renault’s turn to unveil a transformation plan, as it looks to navigate its way out of a perfect storm of a coronavirus pandemic and a steepening global recession. The French carmaker is hoping that this €1.2 billion (RM6.3 billion) plan will help it save more than €2 billion (RM9.7 billion) in fixed costs over the next three years, in order to make it a more competitive player in the industry.
The austerity measures aren’t pretty – during this same period, the company is looking to cut nearly 4,600 jobs in France alone, and over 10,000 in the rest of the world. This “workforce adjustment project” would involve retraining measures, internal mobility and voluntary departures, with a promise of dialogue with social partners and local authorities to carry this out.
Renault says it wants to strengthen cash flow while keeping the customer at the centre of its priorities, through more efficient operations and strict resource management. In France, this means it is focusing on “promising” aspects of its business for long-term development, namely electric vehicles, light commercial vehicles (LCV), the circular economy and high value-added innovation.
The company also estimates it will save €800 million (RM3.9 billion) though cheaper and more efficient product engineering alone, with a more streamlined development process that reduces component diversity and uses the leader-follower concept already outlined in the wider alliance strategy. Resources will also be optimised by concentrating on strategic technologies with high added value, using overseas research and development centres more efficiently and making greater use of subcontracting and digital validation.
A further €650 million (RM3.1 billion) will be saved in production, through the upgrading of its plants and increased digitalisation. Renault also plans to slash global production capacity from four million vehicles last year to 3.3 million by 2024, with the aforementioned job cuts and the suspension of planned capacity increases at the Moroccan and Romanian plants pinching further pennies. It will also study the adaptation of production capacity at its Russian facilities and the rationalisation of gearbox production worldwide.
Rumours in recent months suggested that the Alpine sports car brand would be getting the axe, and while the new plan makes no mention of it, its future remains unclear – especially since Renault says it is open to converting the Dieppe plant, which now makes the A110, once production of that car ends.
Elsewhere in France, the Douai and Maubeuge plants are being considered for the creation of a centre of excellence (no, not the Proton kind) for EVs and LCVs, while the Flins factory will receive a circular economy ecosystem, including the transfer of activities from the Choisy-le-Roi site. The Fonderie de Bretagne plant will also be subjected to a strategic review.
Finally, increased digital marketing and general cost rationalisation, including support functions, will put €700 million (RM3.4 billion) back into Renault’s coffers. The company will also refocus its core business by scaling down its Renault Retail Group (RRG) integrated distribution network in Europe and by ceasing the sale of combustion engine-powered passenger cars in China – a move it announced back in April.
