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FRANCE: Renault cuts production as inventory swells

By just-auto.com editorial team | 14 November 2008

Renault is cutting production at a number of plants, as part of a package of inventory-cutting measures, by scheduling 'days not worked' at several sites in France and Europe.

In Romania, the Dacia Pitesti plant will temporarily close from 20 November to 7 December.

In France, the Flins plant will temporarily close from 20 November to 3 December, and STA Ruiz will close from 10 December to 3 January.

In Spain, Valladolid will stop production for 11 days, and Palencia will stop production for seven days in November and seven more in December.

Worker committees have been informed of the production changes, the automaker said.

"In view of the rapid decline of automotive markets, Renault will reduce its production volumes to bring end-2008 inventories down to the levels of end-2007," Renault said.

Its October sales fell 14.1% year on year as the slow-down in Europe intensified - group sales here fell 16% in October, in line with the market decrease of 15%.

Renault's main emerging markets (Russia, Brazil, Romania, Turkey) also slumped dramatically. The used car market worsened further, particularly in Europe, and the financial crisis became more acute with a strong impact on the dealer network.

"In this environment, Renault continues to place the priority on sales to retail customers and company fleets, as well as on reducing inventories of new and used vehicles, both at the manufacturer and sales network level," it said.

Renault said it would help dealers, under heavy financial pressure, to reduce their inventory and thus their fixed financial assets. It has set up a marketing plan to help to reduce inventory in the network; for example, in France, the used vehicle promotion "Occasions Renault at Argus price".

Another example is the manufacturer paying for the cost of transportation of new vehicles exchanged between dealers.

"The production reduction we are engaging is our answer to the rough decline of the automotive market to adjust our inventory level to the expected sales volume. Our aim is to come back, at the end of 2008, at the same level as end of 2007," said Michel Faivre-Duboz, worldwide supply chain manager.