Renault (RNO) has announced its intention to cut 14,600 jobs as part of a €2bn (£1.8bn, $2.2bn) restructuring plan it hopes will help the French carmaker weather the Covid-19 storm.
The company’s interim CEO Clotilde Delbos stated: “In a context of uncertainty and complexity, this project is vital to guarantee a solid and sustainable performance, with customer satisfaction as a priority.”
Renault will cut 10,000 positions around the world, with a further 4,600 in its French operations, which will undergo a specific and considerable reorganisation. As the company is 15 per cent state-owned, the recent job cuts are likely to have been approved by the French government.
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Major job cuts were by no means uncommon before the pandemic, as the European car industry has endeavoured in recent years to prepare for the onset of electric vehicles and the industrial revolution of artificial intelligence and machine learning.
Framing Renault’s decision within this context, Delbos said: “By capitalising on our many assets such as the electric vehicle, by capitalising 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.”
The Covid-19 crisis can be said to have both accelerated existing changes while limiting the company’s ambition.
Renault’s presentation of its reorganisation as an attempt to improve international development in the long-term is cast into doubt somewhat by its decision to abandon the sale of combustion engine cars in China, the world’s largest car market. Chinese manufacturer Dongfeng will buy out its joint-venture partner.
Whether or not Renault will survive, let alone thrive, will depend on its success in obtaining a €5bn emergency loan guarantee from the French government.
Having fallen over 50 per cent in the year to date, Renault’s share price stands down 5.46 per cent in mid-afternoon Friday trading at €20.72.