Renault may delay investments to preserve cash in crisis deja vu
Renault SA, France’s second-biggest carmaker, may delay investment projects to conserve cash with the European market showing signs of repeating the slowdown following the 2008 financial-market collapse.
“These last weeks, we are back to a trend which is very, very similar to the one we had in 2008,” Chief Operating Officer Carlos Tavares said today in an interview in Stockholm. “It’s a serious, serious situation.”
Renault is reducing inventories and considering ways to cut operating expenses, Tavares said after speaking at an auto conference. The carmaker, based in the suburb of Boulogne- Billancourt, is “much better” prepared for the slowdown than it was three years ago because of lower debt and fewer vehicles in stock, he said.
European car sales in November dropped 3 percent to 1.07 million vehicles from 1.10 million a year earlier, the biggest decline since June, the Brussels-based European Automobile Manufacturers Association said today. Deliveries by Renault, which has lost market share this year, slipped 1.3 percent, with a 3.1 percent drop at the namesake brand partly offset by a 5.7 percent gain at the Dacia division.
Renault started feeling the effects of the weaker European economy in mid-October and expects 2012 to be a “difficult year,” Tavares said.
Contrasting Labor Strategies
PSA Peugeot Citroen, Europe’s second-biggest carmaker, has been more affected by the slowdown, with sales falling 14 percent last month. The Paris-based company may cut as many as 6,800 jobs, including temporary workers and staff working for contractors. Renault, which is 15 percent owned by the French government, will avoid getting rid of employees, Tavares said.
“Our French competitor announced a significant number of layoffs, which is not at all our approach,” Tavares said. “We believe we have enough flexibility in the way we manage the company to avoid these kinds of ultimate decisions.”
Renault said on Nov. 30 that it plans to furlough 2,295 workers at its plant in Valladolid, Spain, for as many as 29 days in the first half of 2012 to reduce production. Spending delays wouldn’t hurt product plans initially, Tavares said.
“I’m talking about rescheduling but nothing will happen in terms of models, at least not in the near term,” he said, declining to provide details.
Renault fell as much as 1.6 percent to 25.58 euros and was down 0.6 percent at 1:51 p.m. in Paris. The stock has fallen 41 percent this year, underperforming the Euro Stoxx Automobiles & Parts Index, which has slumped 28 percent.