Renault plans to cut 14,600 jobs globally as auto downturn bites

Renault SA plans to eliminate about 14,600 jobs worldwide and lower production capacity by almost a fifth as part of cost reductions aimed at outlasting the downturn that has rocked the global auto industry.

The plan includes cutting almost 4,600 positions in France, or about 10% of the carmaker’s total in its home country, through voluntary retirement and retraining, according to a statement Friday. More than 10,000 further jobs will be scrapped in the rest of the world. Renault employs about 180,000 people globally.

To achieve savings of more than 2 billion euros ($2.2 billion) over three years, the plan will cost about 1.2 billion euros to implement. Renault flagged possible adjustments to capacity in Russia, but held off on decisions about the future of six sites in France amid political furor and union opposition, saying that talks will begin on various scenarios including phasing out car assembly at the Flins and Dieppe plants.

The measures will cap a decisive week for Renault and its Japanese partners Nissan Motor Co. and Mitsubishi Motors Corp. as they navigate a slump in consumer demand and factory shutdowns spurred by the coronavirus pandemic.

The French carmaker’s proposals come on top of one by the three-company alliance to lower development and production costs, abandoning the emphasis on growth that marked the era of Carlos Ghosn, who led the alliance for almost two decades before his arrest in late 2018.

The government in France plans to boost vehicle sales with consumer incentives and a cash-for-clunkers scrappage program.

Renault has been at the center of a political maelstrom in recent weeks over its plans to downsize in France while at the same time seeking a state-backed loan of 5 billion euros to bolster reserves.

French Finance Minister Bruno Le Maire warned Thursday he wouldn’t sign the check until he had examined the company’s strategy “site by site, job by job,” with closures being “a last resort.” At the same time, he said Renault’s manufacturing capacity is roughly three times what’s needed this year.

Highlights from Plan:

• Global production capacity to drop to 3.3 million vehicles by 2024 from 4 million in 2019 to save about 650 million euros
• Possible rationalization of worldwide gearbox making
• Generating savings from the engineering division of about 800 million euros
• Marketing, support savings of 700 million euros
• New focus on electric, commercial vehicles in France

The government is Renault’s most powerful shareholder and has representation on its board. In exchange for the auto-industry stimulus package, the state has called for manufacturers to commit to keeping production and research in France. Renault and rival PSA Group have pledged to increase local production of electrified vehicles and components.

“If we do nothing, Renault is in danger,” Le Maire has said. While pledging to stand by the company, he has urged the automaker not to close the Flins factory and give careful consideration to the situation at Maubeuge and Douai.

Renault said Friday it would consult unions on plans to transfer Choisy-le-Roi activities to Flins, where recycling would be developed. The company pledged to study a reconversion of Dieppe, the future of Caudan (Fonderie de Bretagne) and examine Maubeuge and Douai.

To qualify for the government’s support, Renault scrapped its dividend. It burned through 5.5 billion euros in the first quarter, bringing its liquidity down to 10.3 billion euros at the end of March. Renault’s incoming CEO, Luca de Meo, is scheduled to take the helm in July.