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By Gilles Guillaume
PARIS (Reuters) – Renault would possibly have to cut more prices than expected to leave the red zone and its monetary projections are alarming, the new executive leader of French automotive said in an internal memorandum noticed through Reuters.
Luca de Meo, a former Volkswagen executive who took over as CEO in July, wrote in the note to trade unions and staff that generating money and restoring profitability is an immediate priority.
“The goal is to get back on course and solve our maximum urgency disorders as temporarily as possible: money and costs. This means that we might have to spend more than planned with our efforts to lower costs. “Array declared.
Renault admitted in May that its ambitions were unrealistic and announced plans to cut around 15,000 jobs, cut production and restructure French factories in a bid to save 2 billion euros ($ 2. 4 billion).
De Meo did not give a figure in his memo for how much additional cash the company wants to save.
When asked to comment on the memo, a Renault spokesperson said De Meo was executing a plan for the company focusing more on profitability than sales volumes.
Renault, like its spouse of the Japanese alliance Nissan, is reviewing a competitive expansion plan pursued through Carlos Ghosn, his former chief who has a fugitive.
The two were among the weakest global automakers in the COVID-19 crisis, without a transparent plan to use their alliance to emerge from the crisis and share the burden of making an investment in electric cars and other technologies.
‘RED ZONE’
De Meo said Renault in a “red zone” because the COVID-19 pandemic had exacerbated existing problems, adding a downward trajectory in earnings since 2018, its ability to generate cash, declining sales and new models that were unsuccessful. enough.
“Our money projections are alarming. More than ever, we want to redouble our efforts to achieve sustainable profitability and generate moneyArray,” he said.
De Meo said Renault followed the road to recovery through its French rival PSA, carmaker Peugeot, which has focused on cutting prices and generating more successful vehicle lines in recent years.
“For the next few years, we will do what PSA has done for years to come,” he said.
De Meo also said that the Renault logo has been diluted, so it is expected to decrease the number of products at other levels by about 30% and possibly also increase the costs of its small passenger cars, or segment C, by 25. % to 30%.
The CEO called the staff to his circular change plan. Members of the Renault union already made sporadic moves when the last job reduction circular was announced in May.
“We will have to make decisions that are difficult, but mandatory and positive for the company. I would describe this as a revolution,” he wrote in the memo.
“This revolution, which will have to be driven by all the men and women of the company, I call it “Renaulution”.
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(Reporting through Gilles Gillaume; written through Sarah White and Christian Lowe; editing through David Clarke)