Renault unveils €2bn cost-cutting plan

29 May 2020

Renault has announced plans to achieve savings of more than €2bn over the next three years as it aims to “restore its competitiveness and ensure its long-term development”. 

The draft plan is focused on efficiency through simplifying processes, reducing the diversity of components within vehicles and adjusting industrial capacities, the firm said. 

Renault said it would look to improve efficiency and reduce engineering costs by taking advantage of its strengthened alliance with Nissan and Mitsubishi, which it estimated would save €800m. 

It added the alliance would enable Renault to streamline vehicle design under the leader-follower programme and component diversity would be reduced.

Efficient use of resources is being considered under the cost-cutting plan, including the use of R&D centres and subcontracting. Global production capacity will also be trimmed from 4m vehicles in 2019 to 3.3m by 2024.

“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 added. 

Clotilde Delbos, interim chief of Renault, said: “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 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.”

Meanwhile, Nissan announced its own transformation plan that included streamlining unprofitable operations and surplus facilities, and reducing fixed costs by rationalising its production capacity, global product range and expenses.

The carmarker announced it was closing its manufacturing plant in Barcelona as part of the measures. 

The cost-cutting measures have come as car manufacturing plants around the world return to work after production was halted due to the outbreak of coronavirus. 

Figures from the Society of Motor Manufacturers and Traders reveal UK car production declined 99.7% year-on-year in April, with only 197 vehicles made.

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