French car maker Renault has reduced its sales target for next year and increased its cost-cutting plans despite posting stronger-than-expected first-half operating profit of 865 million euros, that is up 20% on last year.
The sixth-biggest selling car manufacturer in Europe cut its sales target by 10% to three million vehicles and is seeking to reduce its workforce through voluntary redundancies.
Renault’s Chief Executive Carlos Ghosn said he has to prepare for turmoil ahead: “You have to strike a balance between company’s resources and its results, it is better to do that when the wind starts to turn rather than when the storm arrives, because then you’d have to make much bigger decision, which we want to avoid.”
He would not be specific about the number of job cuts, but the unions say that 6,000 people will lose their jobs. Vincent Neveu of the CGT union at the car maker said they are not happy with Renault’s pre-emptive action: “Usually it’s when you’re making a loss that you tell the unions that there are difficulties and we anticipate big problems. Right now they’re making big profits and so this is difficult, very difficult, for us to hear.”
Ghosn warned: “We are in a fight in Europe,” adding: “If the markets head south we’re going to have to restructure our manufacturing capacities in Europe.’‘