Renault said on Wednesday (4 January) it expected unit sales to grow in 2006, after a slight rise in 2005, thanks to the recent launch of the small Clio III model and strong demand for the no-frills Logan line.
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The French automaker’s executive vice president for marketing and sales, Patrick Blain, told Reuters during a news conference that Renault would focus on the most profitable market segments of retail consumers and small and medium-sized firms, as it seeks to defend its thinned profit margins in the face of a spike in raw material costs.
The world’s fourth-largest car group reported global sales of 2,531,506 cars and light commercial vehicles in 2005, an increase of 1.7%. European sales fell 4.1%, the news agency added.
Renault reportedly said that in Europe, group volumes should grow slightly on generally stable markets which it expected to be extremely competitive.
“In this context, the priority of the Renault group will remain profitability,” it said in a statement cited by Reuters. New chief executive Carlos Ghosn will unveil a three-year strategy on 9 February with the 2005 results.
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By GlobalDataReuters noted that, last November, the group cut its 2005 operating margin forecast by 1% to “more than 3%”.
“You should not forget the importance of Nissan for Renault at the moment, and that at a time that Nissan is also slowing down,” analyst Patrice Solaro at Kepler Equities told the news agency, adding: “It is good to see the rise of Logan and the increased sales of Samsung, as well as the growth of the Renault brand outside Europe.
But in Europe most models are down and it will be difficult for the company with no new model expected before the end of 2007,” Solaro reportedly added.
Reuters noted that the biggest markets for Renault Group were France, followed by Spain, the United Kingdom and Germany and added that the Megane remained the carmaker’s top-selling model line in Western Europe, with 619,462 sales.
Blain told Reuters that in 2006 Renault sales would be boosted by the newly-laucnhed, fully-redesigned Clio III as well as by the Megane’s recently-announced mid-life update and new engines for the larger Laguna line.
But most of the sales growth will come from outside Europe and he reportedly said Renault now sold 72% of its cars outside France, reducing its dependence on the home market.
According to Reuters, Blain noted the Spanish market had started to turn down towards the end of 2005 while Britain, normally a very profitable market, had declined, as had Italy.
“In Britain there is a price war between the two US groups, Ford and Vauxhall, which has spoiled the market and made it less profitable,” he told the news agency.
In the rest of Europe, Blain reportedly said the German carmakers had also adopted a more aggressive stance on the markets with a series of bargain offerings.
Sector analysts polled by Reuters in December said they expected Ghosn to slash costs by EUR1bn (US$1.20bn) in a plan that could lead to lay offs of up to 10%, with plants in Valladolid and Sandouville most at risk.
Blain reportedly declined to comment on Ghosn’s plans.
But the Brazilian-born chief executive, credited for the turnaround at Nissan, has indicated he wanted to make Renault less dependent on one model (Megane) and the European market, Reuters noted.
