Renault may close French plants to cut costs, reports say

PARIS — Renault is considering closing component and assembly plants in France as part of a 2 billion euro ($2.2 billion) cost-cutting plan, French news media reported.

Among the factories said to be in danger are Renault’s assembly plant in Flins, near Paris, which builds the Renault Zoe EV and Nissan Micra small hatchback. The plant, with 2,600 workers, could be converted to other uses after the Zoe’s life cycle ends in 2022, according to reports in financial daily Les Echos and the political newspaper Le Canard Enchaine.

Prime Minister Eduoard Philippe told senators that he French government will be "uncompromising" in its efforts to protect Renault production sites, Bloomberg reported, citing Agence France-Presse.

The company must “take into account the realities of the country that hosts it and that, in a way, allows it to live,” Philippe said. The French government holds a 15 percent stake in Renault Group.

Last year some 160,000 cars were built at Flins, which was upgraded in 2018 to increase Zoe capacity. About 18,000,000 vehicles have been built at the factory since it opened in 1952, including key Renault models such as the Dauphine, Renault 4, Twingo and Clio. The plant lost an important portion of its production last year when Renault decided to move all Clio assembly to Turkey and Slovenia.

Renault’s factory in Dieppe, northwest France, which builds the limited-production Alpine sports car, is likely to be closed in the near future, the reports said. The factory, which employs about 400 people, is one of the smallest in the Renault-Nissan alliance, and in the past it has built Renault Sport editions as well as Bollore BlueCar EVs under contract.

Two parts factories will also reportedly be closed: A plant in Choisy-le-Roi near Paris that reconditions components and employs about 250 people; and a casting foundry in Morbihan, west France, that employs about 400 people.

Renault would not comment on the reports.

Interim CEO Clothilde Delbos is to present details of the cost-cutting plan on May 28, and alliance partner Nissan will announce its own cutbacks on the same day. Profits have plunged at both automakers following the November 2018 arrest of former alliance chief Carlos Ghosn on charges of financial mismanagement.

Renault posted an annual loss of 141 million euros in 2019, compared with a profit of 3.3 billion euros in 2018. Nissan is due to announce 2019 results later this month, but it posted a net loss of 26.1 billion yen ($238 million) for the October-December third quarter.

Delbos said earlier this year that there would be “no taboos” in cutting fixed costs by 2 billion euros by 2022. Other steps reportedly being considered are sharply reducing Renault’s lineup by discontinuing the Scenic and Espace minivans, Koleos midsize SUV and Talisman midsize sedan, and trimming R&D and engineering expenses.

Renault has also secured a 5 billion-euro loan guaranteed by the French government to help it weather the coronavirus crisis. The automaker burned through 5 billion euros in cash in the first quarter.

Separately, Renault said Wednesday that it will be opening a production line at the Flins plant to make surgical masks for the group as its factories reopen with safety measures in place. About 20 workers will be trained to operate the mostly automated process in a new building on the site, Renault said. Output is estimated at 1.5 million masks per week.