PARIS: French carmaker Renault pledged more cost cuts and to focus on a smaller number of profitable models as its new boss laid out plans to revive a business hammered by management turmoil and the COVID-19 crisis.
In his first strategy update since taking over in July, Chief Executive Luca de Meo said he would simplify manufacturing and rein in spending in areas like research, while cutting car production to 3.1 million units in 2025, from 4 million in 2019.
Those vehicles will be built on fewer shared platforms to pare back costs by 600 euros ($730) per car by 2023. Half of Renault’s vehicle launches will be electrified versions by 2025, and electric models should have better profit margins than their fossil-fuel equivalents, the carmaker said.
“This boosted efficiency will fuel our future line-up: tech-infused, electrified and competitive,” De Meo said on Thursday.
Renault also hiked its cost savings target by 500 million euros to 2.5 billion euros by 2023, and set goals to gradually ramp up operating margins, reaching 5% by 2023.
The company also plans to lower capital spending and research costs to 8% of revenue from 10% by 2025.
Together, these measures should lower Renault’s break-even point by 30% by 2023.
Renault has yet to publish margins for 2020, though following the COVID-19 pandemic which disrupted operations, they are likely to be lower than the 4.8% hit in 2019.
Four years after former boss-turned-fugitive Carlos Ghosn unveiled an ambitious plan for Renault built on growing car volumes globally, De Meo is abandoning expansion to focus on profitability and efficiency.
The executive, who previously ran Volkswagen’s Seat brand, aims to derive at least 20% of Renault’s revenue from services, data and energy trading by 2030.
“We’ll move from a car company working with tech to a tech company working with cars,” he said.
Renault was struggling with waning sales even before the COVID-19 crisis and has been trying to get a partnership with Japan’s Nissan back on track.
($1 = 0.8232 euros)
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