Renault Aims to Cut Fixed Costs

Renault SA seeks to reduce structural costs so that the company can break even with global sales of 2.4 million vehicles compared with 2.6 million units now.

Renault sold more than 2.7 million vehicles last year and reported an operating profit of €300 million, a slim 0.8% return on sales.

COO Carlos Tavares tells the Automotive News Europe Congress in Monaco that shrinking fixed costs would enable the company to avoid a loss even if vehicle sales drop 20%. Volume in Renault's core market of western Europe has fallen 8% year over year in the January-May period.

Renault has backed off predicting its 2012 sales. But it expects volume to reach 3 million vehicles next year.

Tavares also says the brand needs to improve its models and image to command higher prices. The company wants to erase the 10% pricing premium of Volkswagen brand vehicles over comparable Renault models. Tavares says Renault has caught up with PSA's Citroen and is closing the gap with Peugeot.