French carmaker Renault said it had been given a wake-up call with a record net loss of €7.29 billion in the first half of the year, inflicted by the Covid-19 crisis and troubles at its alliance partner Nissan.
Global automakers have been hit hard by the coronavirus pandemic, which has shuttered factories and kept many customers away from car dealerships.
But the Renault-Nissan alliance has been hit especially hard as it was already weakened by low margins and boardroom turmoil surrounding Carlos Ghosn, the architect of the alliance who was ousted in 2018.
"Today's results will be a disturbing wake up call," CEO Luca de Meo, the former Volkswagen executive who started at Renault this month, said on a call with analysts.
"We are currently touching the bottom of a negative curve that started several years ago, and probably even earlier," de Meo added.
"We are in a complex, difficult situation. We all are. But we were already, I would say, feverish. So for sure it is even harder for us," he added.
De Meo said the company would now double down on a previously announced turnaround plan, laying off thousands of workers, reducing the range of models, and improving cooperation between alliance partners on vehicle production.
He said a team of 40 senior executives from across Renault was cloistered on the top floor of the company's headquarters in Boulogne-Billancourt near Paris, working on details of a strategic plan which will be presented in January at the latest.
The CSO said his focus would be pushing the Renault brands that can deliver profits - especially compact cars, SUV crossovers, and electric and hybrid vehicles - and shifting emphasis from volume to value.
"We know what we need to do," de Meo said. "Better times are waiting at the end of this twisty road."
Renault said group operating losses, factoring out the effect of Nissan's losses, reached €2 billion in the first half, compared with operating income of €1.5 billion last year.
Sales slumped 34.9%, a result the company attributed mainly to the global Covid crisis and Renault burned through $6.38 billion in cash over the first half.
Nissan this week warned of a record $4.5 billion operating loss this year and its lowest sales in a decade. Its negative contribution accounted for €4.82 billion of Renault's net losses, the French firm said today.
Renault's performance was worse than investors had expected. Analysts' consensus forecasts were for a net loss of around €5 billion and operating losses of €1.8 billion, according to Refinitiv data.