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Renault Says Action Needed to Lift French Competitiveness

Renault SA (RNO) Chief Executive Officer Carlos Ghosn said the French automaker must take action to increase productivity, hold back pay increases and cut the workforce as the region’s auto sales sink for a sixth year.

“It’s a very comprehensive plan to try and bring back competitiveness to Renault in France,” Ghosn said today in an interview in Davos with Bloomberg Television. “There’s a good consciousness in France that the competitiveness of France needs to be enhanced.”

The Boulogne-Billancourt-based company began talks with unions in November as part of efforts to sustain profit while Europe’s car market falls to almost a two-decade low. France’s second-biggest carmaker is threatening to shutter two factories in the country unless it reaches an agreement with workers, Dominique Chauvin, head of the CFE-CGC union, said this week.

Renault is asking labor leaders to agree to a wage freeze in France this year and then raises of 0.5 percent in 2014 and 0.75 percent in 2015, the carmaker said Jan. 22. Workers’ pay accounts for 60 percent of Renault’s fixed costs in its home country, the company has said. The manufacturer’s proposals come on top of other plans, including a 6.5 percent increase in work hours in French factories, to reduce spending by 65 million euros ($86.6 million).

The manufacturer also wants to eliminate 7,500 jobs through 2016 in France, or 17 percent of Renault’s workforce in the country, to save another 400 million euros.

Tough Market

Renault, the European automaker with the steepest decline in the region last year, said earlier this month that it’s aiming to increase European market share in 2013 as industrywide sales drop 3 percent.

“We are facing a very tough European market,” Ghosn said in the interview. “The best thing we can hope for is a market stabilization, so in Europe the question is how do you gain market share, and that’s a function of products.”

The carmaker said this week that it would increase French production by 15 percent once a labor deal is reached. Renault’s domestic factories would then build 80,000 more vehicles a year by 2016 to supply manufacturers the company cooperates with, including Nissan Motor Co. (7201) and Daimler AG. Renault’s current full-year production in the country amounts to 530,000 vehicles for its own brand.

To contact the reporter on this story: Chad Thomas in Berlin at cthomas16@bloomberg.net

To contact the editor responsible for this story: Chris Reiter at creiter2@bloomberg.net

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