Renault shrank 15,000 jobs and 700,000 cars of capacity, then hit a record margin

The hole was historic. In July 2020 Renault reported its biggest half-year loss ever — €7.3 billion ($8.6 billion), against a €970 million profit a year earlier — as revenue plunged 34% to €18.4 billion in lockdown-emptied dealerships. More than half the loss came from writing down its 43% stake in Nissan, the partner still reeling from Carlos Ghosn's 2018 arrest and ouster. Renault had already secured a €5 billion emergency loan backed by the French state, which holds 15% and attached conditions: keep jobs and production in France, and join a European battery initiative.

Luca de Meo arrived as CEO in July 2020 to revamp a company that, in the words of AFP, was 'reeling from strategic missteps and the ousting of former boss Carlos Ghosn.' The plan on the table: cut around 15,000 jobs worldwide — 4,600 of them in France — trim €2 billion of costs over three years, and slash annual production capacity from four million vehicles to around 3.3 million, closing or restructuring four French plants. Consultations with French worker representatives began the next month, under the loan's employment guarantees.

The recovery took three years to show. In February 2024 Renault reported a €2.2 billion ($2.4 billion) net profit for 2023, revenue up 13% to €52.4 billion, and — after four straight years of declining volumes — a 9% sales rise to 2.2 million vehicles. Price increases and a richer mix of higher-end models pushed the operating margin to a record 7.9%, with €797 million contributed by the Nissan partnership. 'Our fundamentals have never been so solid and there is no question of stopping here,' de Meo said.

From a €7.3bn half-year loss in 2020 to a €2.2bn net profit and a record 7.9% operating margin on €52.4bn revenue in 2023.

The Covid loss exposed a pre-pandemic flaw: four million units of capacity inherited from the growth era against demand that would never come back to match it.

The state's €5bn loan came with strings — employment and production guarantees — forcing a negotiated restructuring rather than an imposed one, and slower but more durable buy-in.

More than half the loss was the Nissan stake write-down, so balance-sheet repair mattered as much as fixing operations.

The recovery came from price and mix, not volume: raising prices and selling more higher-end vehicles lifted the margin to a record while volumes merely returned to growth.

When demand permanently shrinks, shrink first: Renault traded 15,000 jobs and 700,000 vehicles of capacity for the margins it had never managed in its growth years.

With 2023's €2.2bn net profit and record 7.9% margin, Renault planned ten new model launches and committed to keeping the operating margin above 7.5%, helped by continued cost reductions. The turnaround restored Renault after the twin shocks of Covid and the Ghosn affair had left it with its worst-ever half-year and on the edge of a breakup narrative with its own alliance.