Behind Sibeth Ndiaye's blunder, Renault's strategy in question

• Sibeth Ndiaye has fallen in love with automotive professionals after claiming that Renault produces 6 million vehicles a year but only sells half as much
• If the spokesperson for the government admitted an error, she nevertheless raised a subject of real concern at Renault, that of the company's overcapacity of production.
• To fully understand the current economic situation of the company, we must go back and question the strategic mistakes made by management over the past two years.

Sibeth Ndiaye made automotive professionals - and a good number of French internet users - jump after his visit to Jean-Jacques Bourdin on RMC and BFMTV last Friday. Asked about the economy plan announced by the firm, which includes the abolition of 15,000 jobs worldwide (including 4,600 in France), the government spokesperson moved the conversation on the production volume of the car manufacturer .

“You still have to have a figure in mind, I think it's important that listeners and viewers understand it: today, Renault makes 6 million cars a year. Do you know how many they sell? Three million. So you have three million cars left on the floor. That raises questions. "

Sibeth Ndiaye: "Today Renault makes 6 million cars a year and sells 3 million, so you have 3 million cars left on the floor" pic.twitter.com/XJJaVz6JbQ

In the minutes that followed, the Twitter machine started up and many fell on the government spokesperson, accusing him of having mentioned totally crazy figures. 

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Based on the data published by the automobile brand for the year 2019, we realize that Renault produced very exactly 3,818,411 vehicles in its different factories around the world last year, for 3.75 million sales. We are therefore very, very far from the so-called “three million cars that remain on the floor”. Aware of his error, Sibeth Ndiaye also published a corrective tweet a few hours later.

“I said this morning that Renault makes 6M cars and sells 3M. I was talking about Renault's production capacity. Indeed, the company has a production capacity of 6M vehicles per year, but produces only 3M, which weighs on the company. "

I said this morning that Renault makes 6M cars and sells 3M. I was talking about Renault's production capacity. Indeed, the company has a production capacity of 6M vehicles per year, but produces only 3M, which weighs on the company. #BourdinDirect

Caramba, still missed! As Nicolas Barré, the editorial director of Les Echos on Twitter, pointed out, the figure of six million announced is once again erroneous, Renault's production capacity being 4 million vehicles ... "We will nevertheless retain the capacity to production at full capacity of almost 5 million vehicles, "said Clotile Delbos, the group's general manager, on May 29.

Renault sold 3.8 million cars in 2019 for a production capacity of 4 million. Fortunately, the numbers below are totally wacky. https://t.co/16yPLoGrdB

A restructuring that has become inevitable

Despite these arithmetic approximations, the government spokesperson still raises an interesting point to justify this "need to restructure the industrial apparatus" of Renault, just when the government has just validated with the manufacturer the loan of 5 billion guaranteed by the State: that of production overcapacity. "In France, we have the capacity to manufacture 1,080,000 vehicles per year and we produce 655,000," admitted its president Jean-Dominique Sénard recently. Hence "the ' ambition to bring our capacity of 4 million [worldwide] to 3.3 million vehicles per year by 2024," in the words of Clotilde Delbos, the CEO of the company, which did not hesitate to pass a shot at Carlos Ghosn, the former boss of Renault whose spectrum still hangs over the diamond.

“Today we are paying for the volume policy decided by the previous management. We have structural costs cut for growth that has not taken place. The objective of this savings plan is simple, it is to rebuild the foundations of financial performance and ensure the sustainability of the company, "she said on May 29 at the headquarters of the company in Boulogne-Billancourt (Hauts-de-Seine) when the economy plan was announced. For Bruno Le Maire, it is even a question for Renault to play "its survival".

Understanding everything in a showdown between the State and Renault https://t.co/wVKL7qRgnK

And if the health crisis linked to the coronavirus is not the trigger for this restructuring plan - in the cards since February - "it will have legitimized measures that would have been taken anyway", we explains Bernard Jullien, economist specialized in the automobile.

On the other hand, for the lecturer at the University of Bordeaux, the term "survival" is somewhat overvalued: "I am not as alarmist as some. There has been a commercial trough, there have been uncorrected strategic errors, or rather a strategy out of step with what the economy was in recent years, but if we consider that the crisis of Renault and Nissan on The past two years have been essentially a governance crisis, so there is some hope in this recovery plan. ”

When Renault management was slow to react

Nevertheless, the time is serious for Renault, which found itself in the red for the first time since 2008, with losses estimated at 141 million euros in 2019. Especially since the company can no longer lose time, after two years of procrastination during which the group no longer had a captain on board due to the legal proceedings against Carlos Ghosn. If Bernard Jullien wants to qualify the strategic errors of the one nicknamed the “cost killer” in the automotive world, he still points the finger at the apathy of Renault management at a time when the car market 'automobile began its slow but certain decrease.

“The strategic plan, as it was designed in 2017, was not at all delusional if we place ourselves in the economic context of the time. The problem is that in 2018, when we had to change gear and make a radical revision of this plan due to the change in economic conditions, there was no one left, he laments. The staffs were so lost in issues of governance or internal warfare [linked to the alliance with the Nissan group] that it dragged on. Then comes the arrest of Ghosn, and we actually have a year 2019 which is absolutely catastrophic. For this economist, the big fault of the management of Renault was not to react when the time was right. "Without that, he said, there wouldn't necessarily be 15,000 jobs cut today ...".

Renault, a key issue for the government

In France, the State, which conditioned the granting of this loan of 5 billion to guarantees on employment, seems to have won the case, in particular concerning the Maubeuge site whose employees were worried about planned merger with the Douai site. It must be said that in this case, the government is playing its shirt and the cufflinks that go with it: two years before the elections, it would be suicidal for Emmanuel Macron to give the impression of letting go of this symbol of French industry.

"This is a great victory," Jérôme Delvaux, secretary of the CGT-MCA union, told AFP on Tuesday after a meeting held in Bercy with elected officials, employee representatives and company management. Beyond the maintenance of the 2,100 employees, there is also a commitment to find a new vehicle to build to guarantee employment beyond 2023 ”.

Because for the future CEO of Renault, Luca De Meo, who will take office on July 1, the challenge is twofold: to achieve the least violent social restructuring possible (understand: without dry layoffs) and offer employees who will pass through the drops a real prospect for the future with the establishment of a clear strategic plan. An entire program.

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