How do you put a car company on a diet? Renault and its 180,000 employees are about to find out.
Under former CEO Carlos Ghosn, the mantra of Renault was growth, with a target of 5 million vehicles by 2022, a 33 percent increase from 2017's 3.76 million. But a stagnant global automotive market, a gap in competitiveness to rivals such as Peugeot, and now the uncertain impact of the coronavirus pandemic mean that Renault suddenly has a lot of fat to trim.
"We structured ourselves, including the way we work and the way we function, for an ambition that we never achieved," interim CEO Clotilde Delbos said last Friday as Renault announced a plan to save 2 billion euros ($2.2 billion) per year by 2022.
Under the plan, 800 million euros will be trimmed in engineering costs through reduced complexity, fewer outsourcing partners and working more closely with Nissan. An additional 650 million euros will come in production cutbacks as capacity is reduced by about 20 percent through 2024, including potential factory closures. And 700 million euros will be cut in selling, general and administrative (SG&A) costs such as marketing and other back-office functions.
Renault plans to reduce its worldwide head count by 14,600, including some 4,600 jobs in France, largely through early retirement, attrition and other non-forced layoffs.