In its latest draft business plan Renault is seeking to reduce its fixed costs by more than EUR2bn over three years, including the loss of 4,600 jobs in France and 10,000 around the world.
The cost-cutting plans follow a similar business plan announcement from Alliance partner Nissan and a statement earlier this week highlighting the goal of higher Alliance cost savings via increased manufacturing integration from participants.
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Renault said its new 'draft' plan will simplify processes, reduce the diversity of components within vehicles and adjust industrial capacities.
It is unclear how many plant closures will ultimately be part of the planned changes but Renault said actions will be 'implemented in consultation with the social partners and local authorities within the framework of an ongoing dialogue'.
Renault 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.
It also said the 'draft plan will strengthen the company's resilience by focusing on cash flow generation, while keeping the customer at the centre of its priorities'.
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By GlobalDataBeyond this, the draft plan aims to lay the foundations for Groupe Renault's long-term development. In France, the group would be organised around strategic business areas with a promising future: electric vehicles, LCVs, the circular economy and high value-added innovation.
These major regional centres of excellence based in France would be at the heart of the group's recovery. In Flins and Guyancourt, Renault said the group would reorganise its activities.
The company also said a workforce adjustment project would be 'based on retraining measures, internal mobility and voluntary departures'. It would be spread over three years and would concern nearly 4,600 posts in France, to which would be added the reduction of more than 10,000 other positions in the rest of the world.
The project includes the following main elements:
- Improving efficiency and reducing engineering costs, by taking advantage of the strengthened assets of the Alliance, approximately EUR800m;
- Streamlining vehicle design and development: reducing component diversity, increasing standardization, Leader – Follower programs within the Alliance;
- Optimization of resources: concentration of the development of strategic technologies with high added value in the engineering sites of Ile-de-France; optimization of the use of R&D centres abroad and subcontracting; optimization of the means of validation through the increased use of digital;
- Optimization of production saving approximately EUR650m million
- Acceleration of plant transformation through the generalization of Industry 4.0;
- Process improvement in new engineering projects: accelerating digitalization and "design to process".
In terms of industrial capacity:
- Global production capacity revised from 4 million vehicles in 2019 to 3.3 million by 2024;
Adjustments at production sites:
- Suspension of planned capacity increase projects in Morocco and Romania, study of the adaptation of the Group's production capacities in Russia, study of the rationalization of gearbox manufacturing worldwide.
In France, four working hypotheses for optimizing the production will be the subject of in-depth consultation with all stakeholders, in particular the social partners and local authorities:
- Renault is launching a consultation process on the Douai and Maubeuge plants to study the creation of an optimized centre of excellence for electric vehicles and light commercial vehicles in northern France.
- 'Open reflection' on the reconversion of the Dieppe plant at the end of the production of the Alpine A110.
- In Flins, the creation of a circular economy ecosystem on the site, including the transfer of Choisy-le-Roi's activities.
- At the Fonderie de Bretagne, Renault is launching a strategic review.
Renault also said the increased efficiency of support functions would yield approximately EUR700m in cost savings.
The refocusing on the group's core business through a change in its scope would concern in particular:
- Part of the RRG integrated distribution network in Europe.
- The transfer of Groupe Renault's stake in Dongfeng Renault Automotive Company Ltd (DRAC) in China to Dongfeng Motor Corporation and the cessation of Renault branded passenger car combustion engine activities in the Chinese market.
Renault said the plans will be presented to employee representative bodies in accordance with applicable regulations. The estimated cost of implementing this plan is in the order of EUR1.2bn.
"I have confidence in our assets, our values and in the management of the company to succeed with the envisaged transformation and to return our group to its full value by deploying this plan. 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 Groupe Renault a major player in the automotive industry in the years ahead. We are fully aware of our responsibility and the planned transformation can only be achieved with respect for all our group's stakeholders and through exemplary social dialogue," said Jean-Dominique Senard, Chairman of the Board of Directors of Renault.
"In a context of uncertainty and complexity, this project is vital to guarantee a solid and sustainable performance, with customer satisfaction as a priority. By capitalizing on our many assets such as the electric vehicle, by capitalizing on the resources and technologies of Groupe Renault and the Alliance, and by reducing the complexity of development and production of our vehicles, we want to generate economies of scale to restore our overall profitability and ensure our development in France and internationally. This project will enable us to look to the future with confidence," added Clotilde Delbos, interim Chief Executive Officer of Renault.
See also: Nissan confirms Barcelona plant closure
Renault-Nissan-MMC Alliance resets with 'new business model'
