Renault: Beware of French Governments Bearing Gifts

Cammy Corrigan
by Cammy Corrigan

Let’s say you have one of the most unproductive car factories in the world. Car research firm CSM Worldwide says it’ll run at 37 percent this year and possibly 31 percent next year. So what do you do? That’s right, you crank up production. This story just goes to show you how a bailout can be more of a hindrance than a help. Renault has no choice but to keep production at their plant in Sandouville running despite it failing catastrophically. This is because Renault accepted a €3B bailout loan from the French government. A loan which came with a caveat, “Keep production open at French factories!” And now . . .

Because of the worldwide recession and the push towards more fuel efficient cars, vehicles like the Renault Laguna and the Vel Satis (both of which are made at Renault’s plant at Sandouville) are going to be more redundant (unlike the factory staff). Which means Renault will have an excess of stock, which won’t do their finances any favours. Renault management are trying their best to entice staff to leave with generous rendundancy packages or offering them to work half time and receive 70 percent of their wages. But it just isn’t enough.

Whilst the government loans will help Renault in the short term, it won’t do them any good in the long run. After all, how does one cut costs, without cutting staff or closing factories? Cheaper parts on cars? As if Renault’s cars weren’t unreliable enough. Now, if Renault hand’t taken the loans, they would have been free to close the Sandouville plant, transfer what little production was left to a lower cost factory and make meaningful savings towards the long term life of the company. That kind of thinking has a name, what was it . . . ? Oh yeah, “free market economics.”

Cammy Corrigan
Cammy Corrigan

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  • Martin Schwoerer Martin Schwoerer on Mar 20, 2009

    Sarko rides in a C6. And you can't understand the Vel Satis if you've never seen a TGV. In terms of layout and interior design, the Vel Satis is excellent. But it's let down an inferior ride/handling compromise.

  • FromBrazil FromBrazil on Mar 20, 2009
    And you can’t understand the Vel Satis if you’ve never seen a TGV. In terms of layout and interior design, the Vel Satis is excellent. But it’s let down an inferior ride/handling compromise So true, so true. The reason I'd not get this car is the ride, not the design. It's an interesting and, in its own way, a beautiful design. Alas... Appreciators of the same old same old (Germans, Japanese, Koreans et al) need not apply. I think the new Renaults are straddling the line between "the too difficult to understand" and "looks like a normal car" line rather well. Particularly the new Megane (hatch and SW-very beautiful!), Laguna and Clio, though the Scènic has grown worse w/ each passing redesign. Same as the Twingo. The 1st ones were masterpieces. And by the way, the Lincoln C concept car is a beautiful American take on modern French car design. Disclosure: don't care much for the Peugeots and Citroëns though. Too cute and too predictable. So that doesn't make me a general French car apologist. FWIW I rather like that there is a company such as Renault ready to break the mold. Even when they get it wrong. More power too them!
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