Bloomberg News

Renault to Miss Sales Goal on European Car-Market Decline

July 11, 2012

Renault SA (RNO), France’s second-biggest carmaker, scrapped its sales-growth target range for 2012 as the European vehicle-market contraction accelerates.

Renault won’t be able to raise deliveries by 3 percent to 4 percent this year because gains outside Europe will be more than offset by a decline in the region, Jerome Stoll, vice president of sales and marketing, told journalists.

The manufacturer, based in the Paris suburb of Boulogne- Billancourt, said today that it still expects group sales to increase this year because of growth abroad. First-half deliveries fell 3.3 percent from a year earlier to 1.33 million cars and light commercial vehicles, led by a 15 percent drop in Europe, Renault said in a statement.

“Two-thirds of that decline was due to the market and market mix, and one-third was a consequence of choices made to preserve our margins,” Stoll said. “I’m counting on regaining some market share in the second half, particularly in France, with the introduction of new models.”

Car-industry sales in the European Union will probably fall to 12.2 million vehicles this year, the least since 1995 and 21 percent below the 2007 peak, according to regional trade group ACEA. Sales at Renault, larger Paris-based competitor PSA Peugeot Citroen (UG) and Fiat SpA (F) have led the declines as their dependence on southern Europe’s slowing economies took its toll.

Market Projections

The European market may not recover to 2007 levels until 2018, Stoll said in the online press briefing. Renault’s original global sales-growth plan was based an assumption that Europe’s market will shrink by as much as 4 percent, and now the prediction is for a 6 percent to 7 percent regional contraction, he said.

“Given the sales figures for the first half of the year, it is no great surprise that they will be unable to reach the goal,” said Michael Punzet, a Frankfurt-based analyst at DZ Bank who recommends selling Renault stock. “There are a few players who have already reached the pre-crisis levels, but Renault isn’t one of them.”

Renault fell 1.2 percent to 32.25 euros at the close in Paris. That pared the stock’s gain this year to 20 percent, valuing Renault at 9.54 billion euros ($11.7 billion).

Generation Lost

In France, 22.5 percent of people under 25 are out of work, compared with 36 percent in Italy. In Spain, the rate for youth unemployment is 52 percent. With a generation of drivers lost, Europe-focused carmakers face a struggle to stem losses in the region. Peugeot, Renault and Turin, Italy-based Fiat have lost more than 9 billion euros in combined market value over the past 12 months.

Peugeot, Europe’s second-largest carmaker, is planning to eliminate as many as 10,000 jobs in France, more than the previously announced 6,000 positions, according to Christian Lafaye, the head of Peugeot’s second-biggest union FO. The company’s first-half vehicle sales tumbled 13 percent.

“In comparison to Peugeot, Renault’s performance isn’t too bad at all,” said Sascha Gommel, a Frankfurt-based Commerzbank analyst who has a hold recommendation on Renault shares. “The geographic mix is better as they’re less dependent on Europe, but the low-cost brand Dacia is also performing much better than Peugeot and Citroen.”

Sales at the namesake brand of Wolfsburg, Germany-based Volkswagen AG (VOW), Europe’s biggest carmaker, increased 10 percent in the first six months of this year as growth in China and its home German market offset declines elsewhere in Europe.

Renault’s sales in Latin America rose 20 percent to 215,149 vehicles, while deliveries in Russia and other former Soviet states jumped 29 percent to 103,926, the carmaker said. Sales in Europe fell to 708,131 vehicles, with the decline exceeding the auto market’s 7.4 percent drop in the period, it said.

To contact the reporter on this story: Alex Webb in Frankfurt at

To contact the editor responsible for this story: Chad Thomas at

China's Killer Profits
blog comments powered by Disqus