French Carmaker Renault Plans to Change its Business Model

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Famous automaker and main challenges

Famous automaker acknowledged that it set the bar too high regarding its global ambitions. Renault made the decision to cut the number of employees by 15,000. Moreover, the automaker plans to downsize production as well as restructure plants located in France. 

Renault was struggling to cope with problems even before the coronavirus pandemic. However, a slump in demand has been exacerbated by the pandemic. On Friday, Renault announced that it plans to find 2 billion euros in savings over the next three years.

According to interim Chief Executive Clotilde Delbos, the company invested and spent a lot of money in recent years. As stated above, the company was under pressure even before the pandemic. For example, Renault posted its first loss in a decade in 2019. Moreover, the automaker will review all its business. It means that when it comes to restructuring, the company is ready to take decisive measures.

Importantly, Renault plans to reduce its global capacity to 3.3 million vehicles in 2024. Currently, its global capacity is 4 million vehicles. The company wants to focus on its most profitable models and areas such as electric cars while freezing manufacturing expansion in countries like Romania. 

Renault and the French government The French carmaker and global problems

Renault is one of the most famous French companies in the world. Moreover, 15% of the company belongs to the French state. Moreover, the company faces the most sensitive restructuring measures in France. As a result, it will be hard to accomplish any goal with close cooperation with the country’s government. 

According to the carmaker, it was in talks with unions. The company plans to review six sites out of Renault’s 14 plants in France. Moreover, some of six plants like the one in Flins could cease to assemble electric Zoe models, instead, it could focus on recycling activities.

The French government made it clear that it will not sign off on the state-guaranteed loan until the automaker and unions will reach an agreement regarding the jobs and factories in France. Thus, the fate of a 5 billion euro-credit line guaranteed by the government depends on the outcome of this agreement. 

Moreover, the country’s government wants to know more about the factories and how the automaker plans to reorganize the factories located in France. Moreover, the government is seeking further guarantees on jobs before it approves the loan. 

Importantly, just under 10% of its global workforce will be affected by layoffs. The company plans to cut about 4,600 jobs in France. According to Renault, it would prioritize employment transfers as well as voluntary departures and retirement schemes. The restructuring measures will cost 1.2 billion euros. 

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