French automaker Renault SA is considering downsizing its workforce by up to 3,000 employees globally as part of a cost-cutting initiative, as reported by French news outlet l’Informe, cited in The Economic Times.
The cost-saving program, dubbed Arrow, is aimed at roles in support functions such as human resources, finance, and marketing. If enacted, approximately 15% of staff in these departments could be impacted, affecting Renault’s headquarters near Paris and other locations worldwide.
A source familiar with the plan disclosed to l’Informe that a final decision may be disclosed by year-end. While Renault has acknowledged exploring cost-saving measures, it stated that no definitive choices have been made yet.
In response to market uncertainties and intense competition in the automotive sector, a Renault spokesperson highlighted the company’s efforts to streamline operations, enhance execution speed, and optimize fixed expenses.
Facing financial pressures and global competition, Renault, like many in the industry, is navigating challenges. Despite not operating in the US, Renault has felt indirect repercussions from trade dynamics. Additionally, European rivals, grappling with trade obstacles, have intensified their presence in Renault’s domestic market, adding to competitive pressures.
Simultaneously, Renault is encountering heightened competition from Chinese automakers, particularly in the electric and hybrid vehicle sectors, which are increasingly competitive and cost-conscious.
With over 70% of its sales in Europe, where growth is limited, Renault aims to invest €3 billion ($3.4 billion) to introduce eight new models in non-European markets by 2027 to expand its reach.
Renault’s financial performance has been strained, with a reported first-half loss of €11.2 billion in July, including a substantial €9.3 billion write-down related to its partner Nissan. Even excluding this exceptional charge, net income plummeted to €461 million, less than a third of the previous year’s earnings, attributed to challenges in the van market, elevated costs in electric vehicle development, and mounting competition.
While Renault has not provided further details, it is purportedly exploring strategies to streamline operations and cut costs amid a challenging market landscape.