PARIS -- Renault plans more cost cuts and will focus on a smaller number of profitable models as part of a new strategy laid out by CEO Luca de Meo to turn around the money-losing automaker.
In his first business update since taking over last July, de Meo on Thursday outlined plans to simplify manufacturing and reduce spending in areas such as research.
The automaker will also cut production capacity to about 3.1 million vehicles in 2025, from 4 million in 2019.
De Meo increased Renault's cost-savings target by 500 million euros ($608 million) to 2.5 billion euros by 2023, and set goals to gradually ramp up operating margins, reaching 5 percent by 2023.
He plans to lower capital spending and research costs to 8 percent of revenue from 10 percent by 2025. Development time for a new vehicle will be cut by a year, to under three years.
The company is targeting an operating margin of more than 3 percent by 2023 and at least 5 percent by mid-decade. This compares with a 4.8 percent return in 2019, before the automaker racked up record losses in the midst of the coronavirus crisis.
Among the strategy plan's measures are:
- Reducing platforms to three from six
- 24 car launches by 2025
- Dacia and Lada models will be built on one platform instead of four now; body types will be cut to 11 from 18
- The Alpine sports-car brand should become profitable by 2025
De Meo is reversing the ambitious plans of Renault's former boss, Carlos Ghosn, which was based on expanding car volumes globally. "We grew bigger but not better," de Meo said during an online presentation on Thursday, adding that the task now was to "steer our business from market share to margin."
De Meo, 53, faces the difficult task of rationalizing a bloated cost structure and excess production capacity while pacifying the French state, Renault’s largest shareholder.
De Meo, who previously ran Volkswagen Group's Seat brand, said he planned to focus on electric cars in particular in terms of new launches.