Renault Presents Three-Year Reduction Plan Outline

The goal of reducing fixed costs by more than 2 billion euros in three years aims to increase the Group's competitiveness and ensure its long-term development under the roof of the Alliance. The draft plan is based on simplifying processes, reducing component diversity of vehicles, and improving the efficiency of operations by restructuring industrial capacities.

The planned changes will be implemented in consultation and ongoing dialogue with social partners and local institutions.

Boulogne-Billancourt, May 29, 2020 - Groupe Renault announced its transformation program today, which aims to save more than 2 billion euros in three years and lay the foundations of a new competitive structure, as promised on the year it announced.

The underlying factors of the company's efforts to accelerate its transformation were determined as the difficulties faced by the Group, the major crisis faced by the automotive industry and the ecological transformation that must be implemented as soon as possible.

The draft plan, which concentrates on creating cash flow by keeping the customer at the center of its priorities, will increase the company's resilience. The draft, which brings a more efficient approach to operational activities, is based on a more careful management of resources.

However, with this draft plan, it is aimed to lay the foundations of long-term development of Groupe Renault. The group's activities in France will focus on promising strategic areas of activity such as electric vehicles, light commercial vehicles, circular economy and high value-added innovation. These major regional centers of excellence, which will be concentrated in France, will play a major role in the Group's rapid recovery. The group's activities in Flins and Guyancourt will be reorganized.

Profitable and sustainable growth

Groupe Renault will make every effort to realize the workforce arrangements that it plans to make in order to achieve profitable and sustainable growth in an exemplary dialogue with social stakeholders and local institutions.

The workforce restructuring project will be based on retraining, internal job changes and voluntary leaving. Under the project, which will span over three years, 4 positions in France and more than 600 positions in the rest of the world will be reduced.

Jean-Dominique Senard, CEO of Renault, said: “I have full confidence in our assets, our values ​​and the management of the company in order to achieve the envisaged transformation and bring our Group to value by implementing this plan. The planned changes are fundamental to ensuring the sustainability and development of the company in the long term. Together, and with the support of the Alliance's partners, we will achieve our goals and make Groupe Renault one of the biggest players in the automotive industry for years to come. We are aware of our responsibility and believe that the planned transformation can only be achieved by respecting all stakeholders of our Group and through an exemplary social dialogue.

Clotilde Delbos, Renault Interim Chief Executive Officer, said: “This project plays a vital role in ensuring robust and sustainable performance, prioritizing customer satisfaction in an environment of uncertainty and confusion. In addition to our many investments such as electric vehicles, we want to create economies of scale to improve our overall profitability and enable us to thrive in France and around the world by leveraging the resources and technology of Renault and the Alliance and reducing the complexity of the development and production processes of our vehicles. This project will enable us to look to the future more confidently. "

The main elements of the project are as follows:

To increase efficiency and reduce engineering costs by taking advantage of the Alliance's reinforced assets of approximately € 800 million:

Increasing the efficiency of vehicle design and development activities: reducing component diversity, increasing standardization, developing Leader - Follower programs within the Alliance.

Optimizing resources: concentrating the development of high value-added strategic technologies at engineering facilities in le-de-France; Optimizing the use of R&D centers abroad and assigning subcontractors; to optimize possibilities by making more use of digital opportunities.

650 million euros savings with production optimization

Accelerate plant transformation by generalizing Industry 4.0 applications

Implementation improvements in new engineering projects: accelerating digitalization and the "design-implementation" relationship.

Resizing industrial capacities:

▪ To increase global production capacity from 2019 million vehicles in 4 to 2024 million vehicles by 3,3 (Harbor reference).

▪ To regulate the workforce involved in production.

▪ Suspension of planned capacity expansion projects in Morocco and Romania, reorganization of the Group's production capacities in Russia and rationalization of gearbox production worldwide.

▪ Four working hypotheses for optimizing production in France will be thoroughly consulted with all stakeholders, particularly social partners and local authorities:

▪Renault initiated a review process of Douai and Maubeuge facilities to evaluate efforts to create a center of excellence for electric vehicles and light commercial vehicles in northern France.

▪ Rescheduling for the recycling of the Dieppe plant when the Alpine A110 model is finished.

▪ Establishment of a circular ecosystem that includes the transfer of Choisy-le-Roi activities to Flins facilities.

A strategic assessment is launched for Renault Fonderie de Bretagne.

Increasing the efficiency of support operations will save nearly 700m euros

Optimizing overhead and marketing expenses:

digitization to optimize marketing expenses, rationalization of the organization of the company, reduction of cost-related support functions, etc.

Restructuring activities for better allocation of resources

Changing the focus of the group's core activities will particularly include:

Part of RRG's (Renault Retail Group) integrated distribution network in Europe.

Groupe Renault's China-based Dongfeng Renault Automotive Company Ltd. (DRAC) was transferred to Dongfeng Motor Corporation and the operations of Renault-branded internal combustion engine passenger cars were halted in China.

These projects will be presented to organizations representing employees in accordance with current regulations.

The estimated cost of implementing this plan is 1,2 billion euros.

Source: Hibya News Agency

 

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