Groupe Renault, one of the world's top 10 automakers, is in "serious financial difficulty" and might not survive the massive economic slowdown triggered by the global COVID-19 pandemic.
French finance minister Bruno Le Maire affirmed "Renault can disappear" unless it receives a massive financial bailout from the French government. Paris' panicked reaction to Renault's suddenly dim future was spurred by the stunning news Renault plans to close down its flagship factory at Flins (north of Paris), its largest in mainland France.
The Flins Renault Factory currently assembles the Nissan Micra under the Renault-Nissan-Mitsubishi Alliance. It reportedly won't produce any other model beyond the Nissan Micra, according to rumors.
"Flins must not close," Le Maire pointed out. "This is the position of the government and the state shareholder."
The unconfirmed plan to close Flins is part of Renault's sweeping restructuring plan that intends to slash fixed costs by $2.2 billion (€2 billion). Details of the restructuring plan will be revealed May 29.
Also up for closure is Renault's car factory at Dieppe, which produces the Alpine A110 sports car; the Choisy-le-Roi spare parts plant near Paris and the Fonderie de Bretagne engine-and-gearbox plant near Lorient.
On May 19, Renault said it's negotiating a $5.5 billion (€5 billion) state-guaranteed loan to help it cope with the huge slump in demand and reduced liquidity due to the coronavirus-induced economic slowdown. Le Maire has not approved the loan, however.
"We sign when we know what Renault's strategy is," Le Maire pointed out. He said Renault's restructuring plans must include a transition to more eco-friendly vehicles. The French government wants Renault to be more productive "and to produce even more of its vehicles, particularly electric, in France."
The French government is one of Renault's top two shareholders. It owns a 15% stake in the company along with Japan's Nissan Motor Co., Ltd. Renault and Nissan are part of the Renault-Nissan-Mitsubishi Alliance, a partnership between Renault, Nissan and Mitsubishi Motors Corporation. Nissan owns 34% of Mitsubishi. The Renault-Nissan-Mitsubishi Alliance is the world's fourth largest carmaker in terms of volume production.
Nissan is also in dire straits and is expected to reveal details of a major overhaul of its business this week. Nissan could announce the loss of 20,000 jobs worldwide, mostly in Europe and in emerging markets. The massive layoffs intend to help Nissan recover quickly from a sharp decline in sales, also triggered by the pandemic.
Industry pundits argue Nissan is now convinced it has to become much smaller to survive and be a sustainable enterprise. As a consequence, Nissan is expected to slash its annual sales target by one million units. Sales will be focused on the U.S. and China to boost volumes.
