Renault extends cost-cutting plan in bid to improve profitability

Chief executive Luca de Meo lays out plan for turning around struggling car maker

Renault set goals for improving profitability over several years and extended cost-cutting plans as chief executive Luca de Meo laid out his vision for turning around the struggling French car maker.

The company is targeting a more than 3 per cent group operating margin by 2023 and a return of at least 5 per cent two years later, according to a statement Thursday. This compares with 4.8 per cent in 2019, before the manufacturer racked up record losses in the midst of the pandemic.

Renault also bolstered its plans to lower costs, targeting a €2.5 billion reduction by 2023 and a €5 billion cut by 2025. In May of last year, the company said it would aim for €2 billion through 2022.

Mr de Meo, who joined Renault six months ago from Volkswagen, is in a race to stem record losses at Renault to better navigate declining vehicle sales from the pandemic and expensive shift to electric vehicles. The Italian-born brand specialist has inherited a bloated factory footprint and a stable of brands that a cost-cutting plan unveiled in May began to address. – Bloomberg