Renault may not survive the shock of the coronavirus pandemic without help from the French government.
France’s finance minister, Bruno Le Maire, said Friday that the carmaker is in “serious financial difficulty.”
“Renault can disappear,” he told Europe 1 radio.
The company delivered its worst financial performance in a decade in 2019 and the pandemic has piled on the pressure.
Carmakers are contending with a slump in demand for vehicles and huge disruption to their operations, as measures to curb the pandemic shut down factories and kept customers at home. Renault ceased production at its 12 facilities in France in the middle of March, resuming operations at most plants only this month.
Le Maire’s comments come amid speculation in French newspapers that Renault (RNLSY) could be preparing to close several manufacturing locations in France, including its flagship factory at Flins, north of Paris.
“Flins must not close. This is the position of the government and the state shareholder, ” Le Maire said.
The French government and Japan’s Nissan (NSANF) are Renault’s largest shareholders, each owning a 15% stake in the company. The government is currently negotiating the terms of a €5 billion ($5.4 billion) loan for Renault, which Le Maire has not yet signed off on.
“We sign when we know what Renault’s strategy is,” Le Maire said. The company’s plans must include a transition to more eco-friendly vehicles. “We want Renault to be more productive and to produce even more of its vehicles, particularly electric, in France,” he added. Renault is expected to publish details of a cost reduction plan on May 29.
Nissan, which is part of an alliance with Renault and Mitsubishi, is also expected to reveal details of a major overhaul of its business next week. Japanese media reported Friday that it could announce the loss of 20,000 jobs.
Renault and Nissan have been rocked by fallout from the scandal involving their former chairman Carlos Ghosn, who fled Japan in December where he was awaiting trial on charges of financial misconduct. Two men accused of helping to smuggle him out the country were arrested this week in the United States.
Fiat Chrysler (FCAU) walked away from a proposed merger with Renault last year, after the French government dragged its feet on the deal, which would have created the world’s third largest carmaker behind Volkswagen (VLKAF) and Toyota (TM). The deal would have given Renault much-needed scale to compete in the race for electric vehicles. Fiat Chrysler (FCAU) agreed a merger with Peugeot owner PSA Group instead.