AutoBeta(AutoBeta.net)05/21 Report--

Renault is considering closing four factories and cutting five models across France to restructure its business and cut costs by 2 billion euros, foreign media reported.

Reported that in the closed factories include two vehicle factories and two parts factories, two vehicle factories include Flins factory in Paris and Dieppe factory in northern France, two parts factories include Choisy-le-Roi parts factory in Paris and Morbihan foundry in western France.

Some models will also usher in the final life cycle at the same time as the factory closes. According to French media reports, Renault is considering drastic cuts in its production line, with five models coming to the end of their life cycle, including Megane hatchbacks, SUV Correaux, sedan Talisman and Espace minivans, MPV landscapes, and cuts in research and development and engineering costs. Reno did not respond to the report for comment.

The French government raised different opinions on Renault's plan to close the factory. French Prime Minister Edouard Philippe said the French government insisted on keeping Renault's factories in the country and wanted France to continue to serve as Renault's global engineering, research, innovation and development center. It is understood that the French government is Renault's largest shareholder and has Renault's dual voting rights.

Renault will unveil details of its cost-cutting plan on May 28. Renault's operating income in 2019 was 55.537 billion euros, down 3.3% year-on-year, and operating profit was 2.1 billion euros, down 30% year-on-year, according to the financial report. In addition, Renault's net profit attributable to the parent company was negative 141 million euros, the first loss in a decade.

Renault's losses are largely due to Nissan's losses, Renault Group owns 43% of Nissan's equity, Renault's performance is largely dependent on Nissan's contribution, but in the third quarter of fiscal year 2019, Nissan suffered a loss of 26.1 billion yen, coupled with Renault's own business decline and the outbreak of the epidemic, Renault Group's performance has been hit hard. To this end, Renault has decided to slash its annual dividend and cut structural costs by € 2 billion over the next three years.

Renault's total global sales fell 25.9% to 672962 vehicles in the first quarter of 2020 compared with the first quarter of 2019 due to the outbreak of the new crown virus. Revenue fell 19 percent to € 10.13 billion in the quarter and there is no forecast for 2020.

In addition, foreign media quoted people familiar with the matter as saying that Renault has reached agreements with banks on French state-guaranteed loans worth 5 billion euros (about $5.47 billion) to help it cope with the decline in demand and liquidity caused by the outbreak of the new coronavirus.

Renault's situation is not optimistic against the backdrop of continued overseas epidemic spread and declining demand in the global auto market.

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