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Tuesday, April 20, 2021

Record losses for the French “Renault” group of 8 billion euros in 2020 due to the Coronavirus crisis

The economic repercussions of the Corona virus led to record losses for the French car manufacturer “Renault”, which amounted to eight billion euros in the year 2020. In addition to the Covid-19 crisis, the French group incurred losses amounting to 4.9 billion euros due to what its Japanese partner “Nissan” witnessed. Renault owns 43 percent of it. Renault seeks to improve its profitability by compensating for the decline in its sales by saving the financial burden, according to a strategic plan it announced in January.

In the year 2020, the French auto industry group “Renault” incurred record losses amounting to eight billion euros due to the economic repercussions of the Corona virus, but it hopes to improve its conditions thanks to a strategic plan that gives priority to profitability at the expense of sales volume.

The main reason for these losses is due to what was witnessed by its Japanese partner, “Nissan”, of which “Renault” owns 43 percent, which caused the French group to lose 4.9 billion euros.

A statement issued by “Renault” stated that the volume of its sales decreased last year by 21.3 percent, indicating that it sold less than three million cars in a sector that is witnessing a severe collapse.

Operating margin improvement

However, despite the poor results of last year, Renault managed to register an operating margin of 3.5 percent in the second half of 2020, which it considered “a first step in the group’s recovery path”.

Renault seeks to improve its profitability by compensating for the decline in its sales by saving the financial burden, according to a strategic plan it announced in January.

“The year 2021 will likely pose a new challenge, but we have taken the necessary measures,” said Luca de Meo, Group Chief Executive Officer, in a press conference. “We expect pleasant surprises in the second quarter.”

Renault considers that the severe shortage of Asian electronic components that the global economy suffers from may delay the production of 100,000 cars, even if the production shortfall is remedied in the second half of the year, especially by opening factories in the summer.

De Meo’s roadmap aims to create an operating margin of 3 percent by 2023, a goal that was reached in the second half of 2020.

The group is trying to improve its situation through a plan that includes allocating half of the 24 models it intends to release by 2025 for small cars and to the “sedan” category, two of the lucrative categories in which Renault fell.

Renault also wants to increase its fleet of hybrid-engine vehicles based on E-Tech technology and double its sales of electric cars, especially battery-powered models from the Megane, R-5 and Dacia battery-powered.

De Meo said that the French group is in “talks with several parties” to find a concept for a “Renault battery factory.”

An announcement in this regard is expected in the coming months, while the competing group “Stilantis” (the merger of BSA and Fiat Chrysler) is working on building its own plant in cooperation with the oil group “Total”.

In light of the lack of clarity of vision due to the continuation of the pandemic, the group did not publish its forecast for 2021.

On Friday, French Economy Minister Bruno Le Maire said during a visit to Dijon, “We are confident in Renault’s ability to recover.”

He stressed that the French state contributing to “Renault” considers its transformation plan “convincing”.

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