Exclusive: Renault to discontinue Espace model as carmaker cuts costs – sources

PARIS (Reuters) – Renault (RENA.PA) is preparing to substantially reduce its vehicle range, withdrawing well-known but ailing models like the Espace minivans, as part of looming cost cutting plans, four sources in the industry and close to the French carmaker said.

FILE PHOTO: The logo of Renault carmaker is pictured at a dealership in Les Sorinieres, near Nantes, France, February 19, 2020. REUTERS/Stephane Mahe/File Photo

The company, shaken by the downfall of its once star CEO Carlos Ghosn and by setbacks in its main markets, is set to detail at the end of the month how it aims to cut costs by 2 billion euros ($2.16 billion) over the next three years.

That will coincide with Renault’s embattled Japanese partner Nissan (7201.T)’s own strategic update, set to be outlined on May 28 and which should encompass a pullback from Europe and elsewhere to focus on the United States, China and Japan.

“The project is not yet completely set in stone but the Espace, the (compact minivan) Scenic and the large sedan Talisman should already be considered scrapped from the future product programme, it is practically a given that these models will stop,” one of the sources said.

“In short, fewer minivans and sedans and a focus on crossovers and SUVs”, the source added.

The company had already embarked on an overhaul of its ranges in 2009 but it still has between 45 and 50 models in its catalogue, under its own brand as well as Dacia, RSM, Lada and Alpine.

Renault, which last year posted its first net loss in 10 years and has been hit hard like its peers by the coronavirus crisis, declined to comment.

The carmaker, which is 15%-owned by the French state, is negotiating a 4 billion to 5 billion euro aid package with the government to withstand the impact of the drop in sales and production due to the pandemic.

PSA (PEUP.PA), Renault’s French competitor, followed a similar path six years ago, when it announced it would cut the number of its models from 45 to 26 over its three main brands, with the aim of saving 300 million euros a year.

“Renault is far more international than its compatriot, whose sales remain focused on Europe”, another source said. “But even if Renault’s geographical diversity is the factor behind its high number of models, that level is not sustainable anymore.”

Reporting by Gilles Guillaume, Writing by Benoit Van Overstraeten; Editing by Sarah White and Emelia Sithole-Matarise

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