The Renault-Nissan auto-making alliance has taken a huge hit due to the Covid-19 pandemic. French carmaker Renault may not survive without government aid, and its Japanese partner faces massive job cuts to stay afloat.
Renault seeks a euro 5 billion (US $5.5 billion) state-guaranteed loan to cope with the fallout from the virus outbreak. While the government is still considering whether to provide the funds, French Finance Minister Bruno Le Maire warned that the company is facing “serious financial difficulty” and its future could be at stake. “Yes, Renault could disappear,” the minister told media on Friday.
Meanwhile, Nissan is considering axing up to 20,000 jobs (about 15 percent) of its global workforce as the pandemic sinks sales, Kyodo News said. According to the report, the move would mostly affect employees in Europe and some emerging countries. It was earlier reported that the Japanese carmaker may cut $2.8 billion in costs as part of its operational strategy that is set to be announced later this month. According to Reuters, Nissan may pull back from Europe to focus on the US, Chinese, and Japanese markets and close its Barcelona-area plant, shifting its production to Renault plants.
Rumors of possible Renault plant closures are also circulating in the media, with French newspapers claiming that the company could shut down its flagship factory at Flins along with three other facilities as part of its cost-saving plan. French finance minister warned against the closure on Friday, saying that the state owns a stake in the company.
Renault has owned 43 percent of Nissan as part of a rescue of the Japanese automaker from bankruptcy occurring two decades ago. The strategic alliance, which also includes Mitsubishi, suffered a major crisis as the man who tailored it, former chairman Carlos Ghosn, was arrested over alleged financial misconduct in Japan in late 2018. After spending months in a Japanese jail cell, the businessman was released on bail and placed under house arrest to await trial. However, he managed to make an improbable escape and fled to Lebanon in 2019. Ghosn denies any wrongdoing and claims that he was ousted due to his plan to deepen the alliance between Nissan and Renault.