PARIS (Reuters) – French carmaker Renault pledged to slim down and focus more on technology as its new CEO 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 on Thursday he would cut an extra 500 million euros ($608 million) in costs and focus on producing a smaller number of profitable models.
Car production will drop to 3.1 million vehicles by 2025 from 4 million in 2019, while half of new launches will be electrified – including a revamped version of the classic Renault Super Cinq model.
Focused on efficiency and profitability, the plan is a marked departure from the ambitious expansion drive set out four years ago by former boss-turned-fugitive Carlos Ghosn.
“We grew bigger, but not better,” de Meo said in an online presentation, adding the task now was to “steer our business from market share to margin.”
But investors appeared unimpressed, with Renault shares down 3% in morning trade. Jefferies analyst Philippe Houchois described the new profit targets as “underwhelming,” reflecting the “depth of challenges at Renault.”
Even before the COVID-19 pandemic upended the car industry, Renault was struggling to adjust to life without Ghosn, the architect and long-time boss of its alliance with Japan’s Nissan. Ghosn was arrested in Japan in November 2018 on financial misconduct charges, which he denies, and later fled.
The company also faces new challenges, as the European Union tightens emissions regulations and rivals PSA and Fiat Chrysler Automobiles NV complete their merger to create Stellantis, the world’s fourth-biggest automaker, with potentially more resources to meet the industry changes. Read More