After the arrest scandal of its ex CEO, Carlos Ghosn, for tax evasion in Japan, the COVID19 comes to remove the veil from the perilous situation of the French Group Renault.
The automaker was called to order by Bruno le Maire to relocate its activities in France before benefiting from the support of 5 billion euros planned by the French state and to relocate “their most technologically advanced activities”, said the Minister of French Economy in its interview with the newspaper ‘Le Figaro’.
In fact, Renault is going through very difficult times because of the great economic paralysis that is hitting the whole world, including Europe due to the Coronavirus pandemic and the lockdown applied in the majority of the countries of the world. In addition, already destabilized by the poor results, the Renault group recorded for the first time in ten years a loss in 2019.
It should be noted that the French State is a shareholder of up to 15% in the capital of Renault. Thus, as the largest shareholder, the French government uses its prerogatives to impose its strategic directions on Renault.
Renault group is preparing to announce the closure of three of its factories based in France
According to information, not confirmed by Renault, and published by several French media, the group is preparing to announce the closure of three factories based in France and the conversion of the industrial unit of Flins (Yvelines). This strategic plan, scheduled for May 29, 2020, also highlights the need to cut costs by at least 2 billion euros. If this were to happen, the closure of some of the group’s sites on French territory will certainly provoke reactions at several levels, notably social and political. Besides,, the Prime Minister, Edouard Philippe, warning Wednesday that the government would be “uncompromising” on the preservation of the sites. To this end, the French government is planning a support plan for the entire sector in June, the priority axes of which will be the relocation of high-tech activities in France, the development of electric vehicles, and commitment to subcontractors.
For some voices, such as Jordan Bardella, vice-president of the National Rally, and Member of the European Parliament, it should not be a taboo to nationalize to save the French automobile industry.
However, the covid19 crisis affects the entire automotive industry, not just Renault. At the end of March 2020, Eric-Mark Huitema General Director of the Association of European Automobile Manufacturers (ACEA) considered that the automobile industry was experiencing its worst crisis. In France, for example, sales of new vehicles of all categories fell by 70,9% according to estimates provided by the Committee of French Automobile Manufacturers (CCFA), while in Europe the new car market fell 76.3% in April. According to the Chinese Automobile Manufacturers Association (CAAM), the Chinese market saw its sales volumes drop by 79.1%.
To cope with this crisis, most automotive groups will have to play on costs and cut spending to ensure their survival and try to limit the impact of the coronavirus pandemic and the economic measures that follow. That said, the impact on employment of the measures to be taken is worrying.
