Renault to Cut 17% of French Jobs on European Car Market

Renault SA, the automaker whose sales in Europe dropped the most in 2012, will cut 17 percent of its French workforce in the next four years to reduce costs as the region’s market sinks for a sixth straight year in 2013.

Renault plans to eliminate 7,500 positions through 2016 at its French operations, Sophie Chantegay, a spokeswoman for the Boulogne-Billancourt, France-based company, said in a phone interview. The automaker will cut 5,700 of the posts through attrition, she said.

The measures are intended to reduce Renault’s fixed costs by 396 million euros ($528 million), Dominique Chauvin, head of the CFE-CGC union at Renault, said by phone today, citing a management briefing of labor leaders. The manufacturer’s production in France last year fell 18 percent to 530,000 cars, Chauvin said.

“It’s definitely an important and necessary step to do,” said Sascha Gommel, an analyst at Commerzbank AG with a hold recommendation on the shares. “Everything that reduces the cost base in the high-cost countries in western Europe is positive.”

Renault Chief Executive Officer Carlos Ghosn said in an interview earlier today in Detroit that the European car market will drop another 3 percent this year after contracting in 2012 to a two-decade low. PSA Peugeot Citroen, Ford Motor Co. and General Motors Co. are reducing workforces and closing plants in response to plunging demand amid recessions in the region.

No Firings

“If an agreement is signed with unions, this staff redeployment would require neither a plant closing nor any forced departures,” Gerard Leclercq, Renault’s head of operations in France, said in an e-mailed statement. Renault notified unions today that the cuts are needed for its automotive operations in France to break even, he said.

Renault rose 1.8 percent to 41.59 euros at the close in Paris, the highest price since Dec. 19. The stock has gained 35 percent in the past 12 months, valuing the manufacturer at 12.3 billion euros.

First-half earnings before interest, taxes and one-time gains or costs fell 23 percent to 482 million euros, Renault said in July. Revenue declined 0.8 percent as delivery drops in Europe overcame gains elsewhere, it said.

Steepest Drop

The carmaker’s 19 percent sales drop in Europe in the first 11 months of 2012 was the steepest among major producers there, according to the European Automobile Manufacturers’ Association. Industrywide registrations fell 7.2 percent in the period. The Brussels-based association, known as the ACEA, is scheduled to report full-year figures for the market tomorrow.

Peugeot, Europe’s second-biggest carmaker, is eliminating 11,200 French jobs, or 17 percent of its workforce there, and closing a factory on the outskirts of Paris. GM is shuttering a plant in Germany, putting 3,100 positions at risk, while Ford’s European division is halting operations at three factories and cutting 5,700 posts.

Renault isn’t planning any factory shutdowns in France, Ghosn said in the interview today at the North American International Auto Show in Detroit.

Speaking at a press conference at the show, Fiat SpA Chief Executive Officer Sergio Marchionne said that Europe’s volume-car industry was in a “painful” situation, with no one making money. His request for a European Union plan to cut automaking capacity to match demand has been “ignored,” he said.

Fiat said on Dec. 7 it would eliminate 1,500 jobs at its Polish operations to reduce production as it expects to lose 700 million euros in Europe in 2012. The cuts will affect a plant in Tychy as well as sales staff across the country, the Turin, Italy-based carmaker said.

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