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May 14, 2020 10:36 AM

Renault said to drop minivans in cost-cutting drive

Gilles Guillaume
Reuters
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    Renault has built five generations of the Espace since 1984. The current model is pictured.

    PARIS -- Renault is preparing to ax slow-selling minivans and sedans to focus on SUVs and crossovers, four sources in the industry and close to the automaker said.

    The Espace and the Scenic minivans, and the Talisman large sedan, will not be part of the automaker's future product program as Renault seeks to cut costs, one of the sources said. Although no final decision has been taken, "it is practically a given that these models will stop," the source said.

    Renault last overhauled of its range in 2009 but it still has between 45 and 50 models in its catalog under its own brand as well as in its Dacia, Renault Samsung, Lada and Alpine ranges.

    PSA, Renault's French competitor, followed a similar path six years ago, when it announced it would cut the number of its models to 26 from 45 over its three main brands, with the aim of saving 300 million euros a year.

    "Renault is far more international than its compatriot, whose sales remain focused on Europe," another source said. "But even if Renault's geographical diversity is the factor behind its high number of models, that level is not sustainable anymore."

    The Espace, which has sold 1.3 million units since its launch in 1984, would be the most notable to go. The car became the standard bearer, in Europe at least, for the minivan segment. The fifth generation of the model, on the market since 2015, has however struggled against competition from SUVs.

    The Espace, as well as the Scenic, another one of Renault's former bestsellers, would give way to a new Kadjar SUV built in Spain with five-seat and seven-seat versions, two sources said.

    Those two models as well as the Talisman are all built in Renault's factory in Douai, in northern France. But the site would remain active with the planned assembly of two new models based on the Renault-Nissan alliance's new electric vehicle platform.

    Renault sold 77,507 Scenics in Europe last year, down 16 percent on the year before, according to data from JATO Dynamics market researchers. Talisman sales fell 20 percent to 15,826. Sales of the Espace also dropped by 20 percent, to just 9,561 units.

    The automaker has been shaken by the downfall of its former CEO Carlos Ghosn and by setbacks on its main markets. The company last year posted its first net loss in 10 years and has been hit hard like its peers by the coronavirus crisis.

    Renault is 15 percent owned by the French state. It is negotiating a 4 billion to 5 billion euro aid package with the government to withstand the impact of the drop in sales and production due to the pandemic.

    Renault declined to comment.

    To cut costs and boost its profitability, Renault also plans to extract more synergies from its alliance with Nissan and Mitsubishi, sell real estate assets and shut down operations in loss-making markets such as China.

    Acting CEO Clotilde Delbos has said there would be no taboo in cutting costs, raising fears of job cuts and plant closures. That is likely to be politically sensitive in France, however, especially when the automaker is in talks over state aid.

    The company is expected to detail at the end of the month how it aims to cut costs by two billion euros ($2.16 billion) over the next three years. That will coincide with Renault's embattled Japanese alliance partner Nissan's own strategic update, set to be outlined on May 28 and which could encompass a pullback from Europe and elsewhere to focus on the U.S., China and Japan.

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