Renault survived pandemic times due to mammoth state-backed loan, says auditor

Renault SA struggled to find its footing in Covid-19 times but while much of the global automotive industry felt the pain during the pandemic, the French auto company may have been hurt far more and only just managed to keep its head above water due to a a state-backed loan. This is what a French government's auditor recently revealed, pointing to a credit line which is believed to have been as much as 5 billion euros and of which, 4 billion euros were reportedly drawn.

File photo of Renault ZOE electric car. (REUTERS)
File photo of Renault ZOE electric car.

Renault SA reportedly suffered a major liquidity crunch at the very peak of the pandemic - first half of 2020, when factories and showrooms were shut due to lockdown and related restrictions. But while this affected almost every single automotive brand - in France and elsewhere, Renault found the going tougher because it was only just emerging from the debacle of a top-level management turmoil with the arrest of Carlos Ghosn. Renault was also on an aggressive expansion path and Covid may have come as a rude speed bump. As such, it is widely reported that Renault was struggling more than its rivals like Volkswagen AG and Stellantis NV.

But where the loan may have helped Renault to show a net positive balance sheet, the auditor finds that it has not actually solved the problem of profitability. It is reported that Renault has responded by saying the loan helped it to have cash and to calm investors.

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The French government has a sizable stake in Renault, a company that is now looking to go big in the world of electric mobility. Having reimbursed 1 billion euros last year, Renault plans to pay back the same amount this year as well.

(With inputs from Bloomberg)

First Published Date: 08 Feb 2022, 09:57 AM IST
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