Renault CEO Lays Out Slow-Going Plan for Improving Profitability

A new Renault Captur SUV automobile sits on display near weeds growing outside the Renault SA factory in Flins, France, on Wednesday, May 6, 2020. European car sales were almost wiped out in April after governments around the continent closed auto dealerships and other businesses to slow the spread of the coronavirus. Photographer: Christophe Morin/Bloomberg

(Bloomberg) -- Renault SA set goals for improving profitability over several years and extended cost-cutting plans as Chief Executive Officer Luca de Meo laid out his vision for turning around the struggling French carmaker.

The company is targeting a more than 3% group operating margin by 2023 and a return of at least 5% two years later, according to a statement Thursday. This compares with 4.8% in 2019, before the manufacturer racked up record losses in the midst of the pandemic.

Renault also bolstered its plans to lower costs, targeting a 2.5 billion-euro ($3 billion) reduction by 2023 and 5 billion-euro cut by 2025. In May of last year, the company said it would aim for 2 billion euros through 2022.

De Meo, who joined Renault six months ago from Volkswagen AG, is in a race to stem record losses at Renault to better navigate declining vehicle sales from the pandemic and expensive shift to electric vehicles. The Italian-born brand specialist has inherited a bloated factory footprint and stable of brands that a cost-cutting plan unveiled in May began to address.