The company said on Friday it will reduce its fixed costs by more than € 2 billion ($ 2.2 billion) over the next three years. It also plans to reduce the number of cars it builds from 4 million to 3.3 million by 2024, and will stop selling Renault-branded vehicles in China. The company will cost about 1.2 billion euros ($ 1.3 billion) to implement the plan.

Changes are needed because of the slowdown in the global automotive market, the scale of economic fallout from the pandemic, and stricter emission standards. The company has been in trouble for the coronavirus by reporting its worst financial performance over the past decade, and net profit was only € 19 million ($ 21 million), down 99%.

“The Covid crisis has only worsened an existing situation,” CEO Cotilde Delbos said on Friday with analysts. Said. “This unfavorable economic environment marked the boundaries of our business model betting on unprecedented market growth in emerging markets and hence record sales.”

Renault shares have declined by about 50% for the year, and the company is meeting with the French government, which holds a 15% stake, with a loan requirement of € 5 billion ($ 5.4 billion). Under the direction of ex-CEO Carlos Ghosn, the automaker aggressive expansion The strategy seeks to increase sales volumes, which Delbos calls “a diverse, complex and costly staff”.

“We are paying the price for this model today,” said Delbos. “Our increasing size and structural costs are determined for unrealized growth.”

Renault said it will cut costs in engineering, production, sales and management. The company, which has 180,000 employees worldwide, said it would consult unions on the restructuring of some of its plants in France.

“Planned changes are essential to ensure the company’s sustainability and its long-term development,” President Jean-Dominique Senard said in a statement. Said.

Car manufacturers a painful decline worldwideThe coronavirus pandemic has deepened the collapse, raising an industry struggling with huge challenges in transitioning from internal combustion engines to electric vehicles to overcome the climate crisis.

On Tuesday, French President Emmanuel Macron $ 8.8 billion aid package for the country’s automobile industry. Luca de Meo, who previously chaired Volkswagen (VLKAF) The SEAT brand begins on July 1 as Renault’s new CEO.

The decision to remove the Renault brand from China is part of the alliance strategy, and each member will lead in certain geographies, while others follow. Nissan will lead in key markets in Asia, including North America, the Middle East, and China and Japan. Renault ranked first in Europe and South America, while Mitsubishi was appointed in parts of Southeast Asia and Oceania.

Thursday, Nissan announces it reduces production capacity by 20% and closes a facility in Spain as part of the revision.

Charles Riley contributed to this report.