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Renault to cut 15,000 jobs in massive restructuring

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
Demonstrators stand in front of the entrance of the 'Fonderie de Bretagne' foundry, a subsidiary of Renault group, on 28 May 28, in Caudan, western France. (Fred Tanneau/AFP via Getty)

French carmaker Renault (RNO.PA) announced on Friday that it will cut 14,600 jobs worldwide and reduce its production capacity as part of a plan aimed to create cost savings of €2bn (£1.7bn, $2.1) in the next three years.

Renault, already hit by falling sales before coronavirus caused shutdowns and a collapse in consumer demand, said in a statement that 4,600 of the job cuts would take place in France, and 10,000 in the rest of the world.

The company, which employs about 180,000 people globally, also said it would reduce production from 4 million to 3.3 million vehicles by 2024, and focus on its more profitable models.

The French government, which holds a 15% stake in Renault, is in discussions with the carmaker about a €5bn state-backed loan to help it weather the crisis. However, in exchange for the money, Renault must comply with the government’s requests to save jobs and safeguard production in France. 

READ MORE: France earmarks €8bn stimulus package to support its car industry

French president Emmanuel Macron this week announced €8bn in aid for the French automotive industry, which directly employs some 400,000 people in the country.

Macron in return wants to see Renault and the Peugeot group focus more on electric and hybrid vehicles. French car buyers will receive big incentives to buy clean-energy cars as part of the government spending package.

Renault’s overhaul is part of the new strategy for the Renault-Nissan-Mitsubishi Alliance. The Alliance announced on Wednesday (27 May) this week that it would radically restructure to become more cost efficient and avoid doubling up on production.

Renault chairman Jean-Dominique Senard said at a press conference that the focus would be on “efficiency and competitiveness, rather than volume.”

READ MORE: Renault, Nissan and Mitsubishi reboot alliance with new strategy

Under what it calls the “leader-follow” concept, Renault will focus on smaller models and diesels and Nissan (NSANY) will lead development of SUVs and bigger cars. Mitsubishi (MSBHY) will be in charge of hybrid SUVs.

The three will also carve up global regions: Renault will be in charge of the European and Russian regions, and Nissan will focus on China, the US and Japan. The smallest partner of the three, Mitsubishi will be head up south-east Asia.

On Thursday, protestors gathered at Nissan’s plant in Barcelona, Spain, after the Japanese carmaker said it would shut the plant down, making 3,000 people redundant.