Chip Crisis: Renault Will Stop Making 500,000 Cars


Chip: Automaker Renault, which has already stopped production three times this year in Brazil, is facing serious difficulties in manufacturing its vehicles because of the global shortage of semiconductor chips. After Reuters released an estimated reduction of 300,000 units in 2021, the company’s chief financial officer, Clotlide Delbos, went public on Friday (22) and said the cut will be 500,000 vehicles.

Speaking to an audience of analysts, Delbos said that, while much deeper than previously anticipated, the cuts will not compromise earnings prospects, thanks to cost cuts and the strategy of concentrating production on more expensive models. Raising prices and suspending or cutting production has been a common practice among manufacturers around the world due to the absence of the electronic component, which is currently essential in production.

Results and prospects for 2022

Renault explained that the practice of higher car prices showed that while global sales fell 22.3%, third-quarter revenue fell 13.4%. Total sales were €8.98 billion (R$60 billion) against €10.37 billion in the same period last year.

Delbos said Renault has decided to bring forward a €2 billion cost reduction in the coming weeks initially planned for the end of 2022. This will allow the company to have positive cash flow this year in its core business, eliminating dependence on third parties. for your working capital needs. Part of this goal was met with the help of RCI Banque, its financial arm, which injected €930 million in dividends.

On the chip shortage, Delbos said there could be a reduction until December, due to the end of a covid-19 lockdown in Malaysia. However, supplies will still remain restricted for most of next year, the executive estimates.


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