Understanding everything at arm's length between the State and Renault

• Renaut, who is waiting for a state loan of 5 billion euros to overcome the crisis, should announce next week a savings plan which could involve the closure of sites in France, according to Le Canard Enchainé.
• Bruno Le Maire indicated that he was waiting for compensation from the company before authorizing this loan, which the State will guarantee 100%.
• Like the entire automotive sector, Renault is waiting to hear about the measures proposed by the State to save the sector.

The years go by, the Coronavirus upsets the rules a little, but in the end, the French automobile industry and the State play this little game with their eyes closed, since they know it by heart. On the one hand, a company that wants to take advantage of a major crisis to restructure its workforce in the territory where production costs it the most, on the other, a government that storms all the more so as it has its hands on the trigger tail of the revolver. Five billion 90% guaranteed to convince reluctant banks to save a soldier who is already in very bad shape.

Bruno Le Maire: "Renault is in serious financial difficulty (...) There is an urgent need to act (...) Renault can disappear" # Europe1 pic.twitter.com/7KLS8rWgPW

After Edouard Philippe the day before, it was Bruno Le Maire who got angry this Friday in Le Figaro after learning about Renault's desire to make skin on four French sites (Choisy-le-Roi, Dieppe, the foundry from Brittany to Caudan, and especially the emblematic Flins) as well as to several thousand employees, according to the first echoes, of the drastic economy plan which must be announced by the French manufacturer on May 29. 20 Minutes summarizes the challenges of the showdown with the economist Flavien Neuvy, director of the Cetelem automotive observatory

Can Renault go bankrupt?

"Renault is playing its survival", in the words of Bruno Le Maire. Like other sectors of the economy, the auto industry has taken a tsunami in the face because of the pandemic. 70% fewer registrations in April compared to 2019, and 5 million euros of cash already evaporated to park the patient. Catastrophic figures that follow a year 2019 already not very crazy with a net loss of 140 million euros and a decline in sales of 3.4%. Even if the group promises that it does not plan dry layoffs in its boxes, it clearly aims to reduce the wing to survive a year 2020 already lost. Indeed, it is hard to see the French rushing to buy new vehicles this summer when most just hope to have a job again in September.

🗣 François Lenglet on the crisis experienced by #Renault: "The industrial tool is no longer sized for the market [...] There is considerable overcapacity, these factories produce at 30 or 40% of their capacity. "

📺 @audrey_crespo in #AudreyAndCo on # La26. pic.twitter.com/Yx2huO8WE9

Flavien Neuvy's opinion  : "You have to know how to keep reason. The fact that the State is a shareholder [up to 15%] is an important factor in the sustainability of Renault. We are not talking about any company in France. It is a very strong brand, which has a powerful past in the country. And then, despite a complicated economic situation, it has the assets to rebound. First, its range of low cost cars [Logan, Duster, Kwid], which allow it to conquer the markets of developing countries. And then its alliance with Nissan, even if it had an air hole. It is in difficult times that synergy measures can be important and get Renault out of the crisis ”

Does the company pay for bad choices made in the past?

The famous model of the 5,000 dollar car that has made all of Renault's fortune since the early 2000s has not really benefited its factories based in France, since it is based above all on manufacturing in low-cost countries cost. A know-how envied by the competition, but which comes up against the new anti-pollution standards set by Europe. The stars of its car fleet happily exceed the 95g / km of CO2 emission sought, and the amount of fines promised by Brussels promises to be considerable. Forced to abandon thermal and diesel cars as quickly as everyone else, Renault has also weakened on its own with cascading governance problems since the arrest of its former CEO Carlos Ghosn in 2018. Its new managing director , poached at Volkswagen, is not expected before July.

🚗 According to the Minister of Economy Bruno Le Maire, #Renault "plays its survival". According to @catandreLCI, the group has been in bad shape for several years already.

🗣 Listen to it in #LaMatinaleLCI from @pascaledelatour. pic.twitter.com/OR8rpsISa4

Flavien Neuvy's opinion  : “We knew before the Covid that the automobile industry was going to enter a difficult period after ten years of incredible growth. The golden age is over, because manufacturers must both invest heavily to clean up future models, and manage a stabilization of sales rather downward, while production capacities are very [too?] High, including included in French factories. To these structural difficulties, Renault must add in addition to its own leadership problems. In the automotive industry, where strategic decisions have to be made almost every day, this weighs a lot when there is several months of latency at the level of general management ”,

Can the State really blackmail Renault and impose drastic counterparts on it?

Edouard Philippe is the first to have stepped up to the plate on Wednesday, promising to be "uncompromising with Renault on the preservation of sites", before a second blade signed Bruno Le Maire, who more or less threatens not to send in the transfer of 5 billion before receiving guarantees. The said guarantees nevertheless seem rather vague: "We ask the manufacturers to make commitments in three directions: the electric vehicle, the respect of their subcontractors and the location in France of their technologically most advanced activities", declared the Minister of Economy in Figaro , before completing on Europe 1: "Flins must not close". Bruno Le Maire that the case of the Yvelines factory, where 2,600 permanent employees assemble the Zoé in particular, has everything to turn into an explosive file in Florange (Arcelor) or in Aulnay-sous-Bois (PSA), of the kind to mark his time, and his minister.

The Renault site of "Flins must not close", according to Bruno Le Maire https://t.co/dttdfgOu9A pic.twitter.com/SVDMhaXfgV

Flavien Neuvy's opinion  : “Given Renault's situation, it is hardly surprising that threatened sites are announced around the world, and not only in France. Afterwards, when we touch on the automobile industry, it always provokes a lot of discussion, because it is an industry which makes a lot of people work and which represents a strong symbol in our country. The state cannot ignore Renault. But with regard to the guarantees requested by the State, I await more explanations. For example, when we talk about relocating the most advanced activities, I don't know what is meant behind that. In the meantime, I will not allow myself to judge. ”

Can the recovery plan being prepared for the entire sector put Renault (and the others) back in the right direction?

After tourism and before aeronautics, the entire automotive sector and its 400,000 industrial jobs will know next week what the State imagined to get it out of the panic. In view of the intentions displayed by Bruno Le Maire on the “decarbonation of the French economy”, and the pressure of public opinion which will intend to demand accounts for the ecological compensation required from Renault and others, the priority could be directed towards the establishment of bonuses for the purchase of clean vehicles (hybrid and electric). This could help Renault and its electric blockbuster, the Zoé, but it's like a 4D blockbuster: for the moment, nobody is buying or almost (95% of sales relate to thermal or diesel engines).

Automobile: towards a recovery plan not favoring only the electric https://t.co/JFZc630R5k

Flavien Neuvy's opinion  : “Today, what I want to see is what exactly will be the scope of this support plan. Because if it targets only electric cars, this is not what will revive the French automobile industry and which will make factories run at the height of their production capacity. Take the batteries, it is first in Asia that it happens. And above all that does not resolve the question of the equipment manufacturers who manufacture the motors, since there are no motors on electric cars! This therefore risks having a fairly limited impact if we stay there ”.

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• Renault
• Covid 19
• Economy
• Coronavirus
• Automobile