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Renault to cut 15,000 jobs worldwide to reduce costs

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Renault to cut 15,000 jobs worldwide to reduce costs

Renault announced on Friday (29) its cost reduction plans, which aim to save more than 2 billion euros (US $ 2.2 billion) over the next 3 years. Among the objectives is to cut 15 thousand jobs.

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In total, layoffs represent 8% of the company's employees worldwide (180 thousand). About 4,600 of the cuts will take place in France.

According to the brand, the layoffs will not happen directly, but through retirements that will not be replaced, professional recycling, internal mobility and voluntary layoffs.

Among the measures adopted are:

  • Reducing the diversity of components and increasing standardization between vehicles;
  • Digitalization in the sectors of new engineering, validation and marketing projects;
  • Closure of one of the 14 factories in France;
  • Suspension of the capacity increase projects planned in Morocco and Romania;
  • Closing of Renault combustion engine passenger vehicles in the Chinese market;
  • The Flins plant (in France), with 2,600 workers, must stop producing cars and focus on recycling parts;
  • Resizing industrial capacity from 4 million vehicles in 2019 to 3.3 million by 2024;
  • Rationalization of the manufacture of gearboxes in the world;
  • Concentration in the development of strategic technologies with high added value in Paris;
  • Creation of a hub for electric and light commercial vehicles in France.

The estimated cost of implementing this plan is of the order of 1.2 billion euros.

The cut is very important: 650 million euros (US $ 722 million) less in fixed costs, 800 million (US $ 889 million) less in engineering and 700 million (US $ 777 million) in savings in general expenses, among others.

In total, the reduction is expected to reach 2.15 billion euros ($ 2.39 billion) per year less in fixed costs when the plan comes to an end.

“In a context full of uncertainties and complexity, this plan is vital to guarantee a solid and sustainable performance, with the satisfaction of our customers as a priority”, said Renault's interim executive president, Clotilde Delbos.

The coronavirus crisis was another blow to the car market, which was already in crisis. In April, sales fell 76.3% as a result of the closing of dealerships in many countries.

In this context, Renault and its allies, Nissan and Mitsubishi Motors, decided on Wednesday a change of strategy to privilege profitability, instead of the race to produce more and more that had been applied by the former president of the group, Carlos Ghosn .

The goal now is to jointly produce almost half of the models of the three companies by 2025.

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