PARIS -- A key element in Renault's new Drive the Change strategy will involve improving capacity utilization in the company's plants.
Announcing the company's new strategic goals for 2011 through 2016 on Feb. 10, Renault CEO Carlos Ghosn said he aims to boost capacity utilization in the automaker's European plants to more than 84 percent in 2013 from 64 percent now. An automaker typically needs at least 80 percent utilization for a plant to be profitable, researchers say.
Ghosn also said Renault will boost capacity utilization worldwide from 83 percent in 2010 to 101 percent in 2013.
Two-thirds of the capacity-utilization improvements will come from “adjusting capacities” and the rest will come from increasing Renault's and its partners' production, Ghosn said.
However, Renault's ability to improve capacity utilization is limited because the government in its home country of France would oppose factory closures or large job losses, Carlos Da Silva, an analyst for IHS Global Insight, said.
“Renault is among the worst in terms of the flexibility it has to reduce capacity,” Da Silva told Automotive News Europe. “Opel and Ford have more flexibility to close plants, while Renault, as well as PSA/Peugeot-Citroen, are touchier on the subject because of the French government's influence.”
France's capacity reductions will involve reducing shifts, Da Silva said. “Ghosn said he is reducing shifts in European plants thus raising the capacity utilization, but in fact it is more like a trick than a factual reality,” he said. “At the end of the day, Renault is not closing any plants [in France], in line with the French government's wishes.”
The French government owns 15 percent of Renault.
However, reducing shifts will still have a positive effect on Renault's margins, Da Silva said. “Renault will not be burning as much money as it was before with too many production lines,” he said.
Other important elements of Renault's strategy include:
• ELECTRIC CARS: With plans to have four electric vehicles on sale by 2012 and further new models to follow from 2014 to 2016, Renault-Nissan aims to put a cumulative 1.5 million EVs on the road worldwide by 2016. By 2015, the alliance will have a production capacity of 500,000 EVs a year.