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COVID-19 puts financial strain on Renault: report

Struggling: French minister Bruno Le Maire has implored Renault to keep open its Flins factory, which produces vehicles such as the Zoe EV.

French finance minister warns Renault could ‘disappear’ without financial help

25 May 2020

THE French government’s finance minister Bruno Le Maire has declared that domestic car-maker Renault could be in dire trouble if it does not secure financial assistance to help it through the COVID-19 pandemic, according to a report from news agency Reuters.

 

The news comes at the same time as reports out of Japan indicate that Renault’s alliance partner Nissan may have to lay off up to 20,000 employees, many of whom are located in Europe.

 

When asked about Renault’s financial situation in an interview on Europe 1 radio on Friday, Mr Le Maire reportedly said: “Yes, Renault could disappear.”

 

The French government currently holds a 15 per cent stake in Renault, with Mr Le Maire saying the government is considering a €5 billion ($A8.33b) loan to help the company through the COVID-19 crisis, which has ravaged new-vehicle sales and production capacities across the world.

 

In France alone, sales were down 89 per cent last month, and for the year to date are now 48 per cent behind where they were at the same point in 2019.

 

Mr Le Maire said Renault must keep open the doors of its Flins factory situated north-west of Paris, which as of the end of 2018 employed 2642 people and built nearly 200,000 vehicles per annum spanning the Clio light hatch, Zoe EV and Nissan Micra micro hatch.

 

He added that Renault should be able to keep as many jobs as possible in France, however acknowledged that the company must be able to adapt to stay competitive.

 

When asked by Reuters to provide a response to Mr Le Maire’s comments, Renault declined to respond.

 

Meanwhile, Japanese news agency Kyodo has reported that Nissan may be planning to axe approximately 20,000 jobs from its global workforce, with the majority of cuts coming in Europe and developing countries.

 

In July last year, the company announced it was cutting 12,500 jobs following its second-quarter financial results which indicated a significant drop in revenue and profit.

 

Most of the 2019 layoffs were in the production side of the business, with 12,500 employees representing almost 10 per cent of the Japanese auto giant’s overall manpower.

 

Reuters claims that sources have said Nissan’s management believes the company has to become smaller to survive and will shed about one million cars from its annual sales target, while shifting more focus towards the US and Chinese markets.

 

The same sources claim Nissan’s European business will be streamlined to focus on SUVs and LCVs, while a plant in Barcelona that produces LCVs for export could be closed, putting 3000 jobs at risk.

 

In July last year, Nissan said it would reduce the size of its global model portfolio by around 10 per cent by the end of the 2022 financial year, indicating at least one of its lines will be discontinued.

 

The two-decade-long Renault-Nissan relationship has been tested in recent years, particularly with the scandal surrounding former Nissan CEO and alliance chairman Carlos Ghosn, who was accused of financial misconduct in late 2018 and subsequently fined $US16.1 million ($A24.64m) by the US Securities and Exchange Commission for attempting to hide personal payments and benefits.

 

As GoAuto has reported, Mr Ghosn skipped bail in Japan and fled to Lebanon on December 29 last year to avoid facing various charges including underreporting his salary.

 

Renault announced in January that it had hired former Volkswagen Group senior executive Luca de Meo to the chief executive role vacated by Thierry Bollore last October, with chief financial officer Clotilde Delbos – who had stepped into the interim CEO role after Mr Bollore’s departure – promoted to deputy CEO.

 

These new positions take effect on July 1.

 

Renault was also in discussions with Fiat Chrysler Automobiles last year over a potential merger, however negotiations fell apart due to “political conditions in France”, suggesting the French government was not on board.


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