After one of its toughest years in history, the global vehicle industry is roaring back as lockdown-weary and public-transport-leery consumers swarm showrooms. The biggest carmakers have reported double-digit jumps in first-quarter revenue, even as they battle a semiconductor shortage that’s forced production cutbacks. And booming sales mean they can move the metal without discounts, spurring several to raise their profit forecasts for the year.
And the pandemic laid bare weaknesses stemming from its underutilised factories, labour strife and meddling by its most powerful shareholder, the French government. “Management has identified the problems,” says Charles Coldicott, an analyst at stock research house Redburn. “But it will be very challenging for Renault to properly turn around.”
Luca de Meo, the Italy-born CEO Renault poached from Volkswagen a year ago, is overseeing a plan to rein in costs by €3bn over four years. The proposal includes eliminating 14,600 jobs — 9% of the global workforce — with an aim of reducing manufacturing capacity by about 20%. Of greater concern is De Meo’s target of getting the cost of research and development and capital investment under 8% of revenue by 2025, from about 10% today.
In the wake of Ghosn’s arrest for alleged financial misconduct, the alliance with the Japanese companies has looked more like a squabbling family, which has hurt employee morale and slowed integration. Renault chair Jean-Dominique Senard, who’s also vice-chair of Nissan, calls the alliance irreversible, but it’s been riven by conflict rooted in an imbalance of power.