The new chief executive of Renault has promised a radical turnround plan after the French carmaker tumbled to a record €7.3bn loss in the first half of the year.
Luca de Meo, who took over this month, will outline plans in January to revive the group, hammered by the pandemic and hobbled by its troubled alliance with Japan’s Nissan.
Renault on Thursday blamed its Japanese partner in part for its loss, saying €4.8bn of the hit was down to Nissan, with €4.3bn coming from restructuring and impairment charges. Renault owns 43 per cent of Nissan.
Revenues at Renault fell 34 per cent to €18.4bn compared with the same period last year, while sales fell 35 per cent. Philippe Houchois at Jefferies said the results “barely met a well guided and negative consensus”.
Mr de Meo said Renault was “currently touching the bottom of a negative curve that started several years ago” and he would move the “whole system from volume to value”.
He said the six to seven-year plan “goes from simply surviving the storm to putting this team in a place where we have never been”, attacking “fixed cost, variable cost, cash and revenue management”.
The entire car industry has suffered as Covid-19 has forced the closure of showrooms and factories and radically reduced consumer appetite for cars. The sector was already under huge pressure because of tightening emission regulations and trade disruption.
Renault put in place a €5bn credit line with banks backed by the French government, its largest shareholder, to get it through the crisis. The group burnt through €6.4bn in cash in the first half and said it was not in a position to give full-year guidance. But it confirmed a €600m cost reduction target for this year.
Companies from General Motors of the US to Germany’s Volkswagen have posted losses from the pandemic, with VW on Wednesday forecasting it will be profitable this year despite a €1.4bn loss in the first six months.
However, Renault’s results contrast sharply with that of French rival PSA, the owner of Peugeot, which managed to eke out an unexpected profit of €595m in the first half of the year.
PSA is gearing up to complete a merger with Italian-American Fiat Chrysler, a group with whom Renault also came close to a deal.
Renault’s strategic reset will build on the plan announced in May — a three year €2bn cost-cutting initiative that will involve shedding 15,000 jobs, including politically sensitive losses in France. It will cut global production capacity from 4m vehicles in 2019 to 3.3m by 2024.
Before his arrest on charges of financial misconduct in Japan, Carlos Ghosn, Renault’s former boss and head of the alliance with Nissan, had targeted selling more than 5m vehicles by 2022.
It will also build on the new alliance model with Nissan and Mitsubishi, in which each member of the trio will focus on different parts of the global market — an attempt to repair the damaged relationship between the three groups exacerbated by the arrest of Mr Ghosn.
“We're trying to focus on four or five key projects where we can really prove to each other that by working together, it’s going to bring a benefit,” said Mr de Meo.
But he said “the first priority for both companies is to focus and fix their miseries internally . . . to make sure the fire doesn’t go in all the house.”
Get alerts on Renault SA when a new story is published