Slimmer, Badger, Greener (Don’t Mention France Job Cuts) By

© Reuters.

By Geoffrey Smith – Renault took a step back from its global ambitions Thursday by unveiling a new strategy based on making fewer, more valuable cars. The struggling French automaker is essentially following the path traveled four years ago by General Motors (NYSE :), acknowledging that it has spent the past five years making too many cars – and too cheap too. It accelerates a process that was already in full swing since last year, when the group sold a joint venture with Dongfeng Automotive for the Chinese market. It also came the same week that Renault (PA 🙂 signed a joint venture with hydrogen fuel cell maker Plug Power (NASDAQ 🙂 in a bid to defend its position in light commercial vehicles, a segment that will win in importance as Online shopping reinforces demand for door-to-door product delivery. The plan is a strong statement of intent from the new CEO, Luca di Meo, who stamps his authority on a company that has strayed alarmingly since the scandalous removal of Carlos Ghosn that exposed a regrettable situation both internally and in relations with your alliance partner Nissan. (CORPS OF MILITARY CADETS :). In the next five years, the group will reduce its manufacturing capacity by 22%, mainly in Latin America and India, and will significantly optimize its product offering, finally producing 80% of its production on three base model platforms shared with Nissan. . By 2025, it expects two-thirds of the models in its sales mix to be hybrids or batteries. Renault expects to reduce equilibrium cash costs by 30% by 2023 and increase operating margins to 5% by 2025. While that would be a clear improvement of less than 4% in 2019, the last pre-pandemic year, it would still leave it very below rivals Peugeot (OTC 🙂 and Volkswagen (DE :), with which it has normally been measured. Surprisingly, shares in Peugeot and Volkswagen far outperformed Renault on Thursday. Peugeot shares rose 5.0%, helped by the formal completion of its merger with Fiat Chrysler. VW shares rose 4.0%. That makes sense: reducing global overcapacity will help them just as much as Renault, although both may now face more concentrated competition in their local European market. Renault’s new strategy sees an enhanced role for low-cost manufacturing plants in Romania, Morocco and Turkey. However, he is less forthcoming about the future of high-cost French plants. Not a word was spent in the strategy presentation on capacity adjustments there. This is clearly not the best time to announce large-scale job cuts in France, but it’s never a good time for that. It is still a nettle that di Meo will have to catch sooner or later. Despite the strategy calling on Renault to embrace disruption, be it from the electric revolution or changing usage patterns, the reality is that disruption embraced Renault a long time ago and that last year’s multibillion-dollar losses were slow to come. to get. It will be an uphill fight.

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