- Renault unveiled its worst quarterly result in history with more than 7.3 billion losses.
- The automotive industry group has paid for a strategy widely considered to be deficient for several years.
- But a recovery is not impossible in a sector which often experiences strong variations.
7 billion and 300 million euros: just the figure leaves you speechless. These are, in euros, Renault's losses for the first half of 2019. We know the French car manufacturer in difficulty, in great difficulty even with the health crisis of the coronavirus, we now have a more precise idea disaster. Renault management had anticipated it: 15,000 jobs must be cut worldwide, including 4,600 in France. But what do these numbers mean? 20 Minutes try to see it a little more clearly.
What does this 7.3 billion euros loss represent?
For Boeotians and Boeotians, 7.3 billion deadweight losses is a lot… but for specialists too. "This is the worst figure in the history of Renault, in 2004, during the previous one, they had announced only 3 billion losses", remembers an analyst of the automotive sector with 20 Minutes , on condition of anonymity . There are around 5 billion on the Nissan side and 2 billion on the Renault side. Does this mean that the alliance with the Japanese manufacturer weighs down the French? It's a bit simplistic: "In an alliance you are sometimes better than your partner, sometimes less well, there the problem is that the two partners are bad", explains our analyst.
"We are currently touching the low point of a negative curve that started several years ago," said Luca de Meo, Renault's new boss, during a conference call, who wants to believe in a recovery, even soft. In any case, even if it does not seem absolutely obvious at first glance, the government's plan to boost the sector seems to have borne fruit: we have already seen registrations start to rise again in June. Without that, it could have been even worse, believes our specialist.
Beyond the coronavirus, a strategy long criticized
Renault has been in turmoil at least since the arrest of its former CEO, Carlos Ghosn, in Japan at the end of 2018. The automotive group's strategic wandering comes at a high price, the health crisis has a multiplier effect. Management does not deny it. This is also what the CGT points out, after the publication of the half-year results. If "the situation related to Covid-19 has impacted production", the poor half-year results are the "consequence of the financial strategy developed by the managers, to the detriment of the industrial strategy", estimates the union in a press release.
“The strategy of profit to the detriment of volumes is suicidal for our group. At each exit of vehicles, prices are increased, ”criticizes the CGT. "The vehicles sold in France are no longer manufactured there, while the urgency of environmental issues should encourage us to produce where we sell", adds the union. The CGT therefore criticizes the savings plan of 2 billion euros announced several weeks ago by the management. 15,000 jobs must be eliminated, including 4,600 in France.
What prospects?
In the short term, it is hard to believe in a recovery. "We expect a drop in sales of 10 to 15% over the last six months of the year," says the automotive consultant. Not enough to straighten up immediately. But with 7.3 billion euros in sight, isn't it the sustainability of the company that is at stake? Not necessarily, because the automotive industry is characterized by very strong variations: “In this industry, when things hit, they hit hard. But there is a strong rebound capacity. You could have asked me the same question in 2014 on PSA, and then Carlos Tavarès arrived and made the necessary reforms, ”he adds.
And indeed, PSA does not look the same at all in this first half. Despite the health crisis, Peugeot Citroën is profitable in the first half with more than 500 million euros in earnings. Luca de Meo acknowledged that the strategy of Carlos Tavares, which took over PSA from the brink of bankruptcy and spectacularly turned it around from 2014, was an "inspiration". Like its competitor, Renault now wishes to focus "on profitable and growing market segments".
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