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Renault Expects European Car Market to Decline 5% This Year

Renault SA (RNO), France’s second-largest carmaker, is expecting European car market to shrink five percent this year over last year, Carlos Tavares, chief operating officer, said.

The French carmaker, whose worldwide deliveries last year fell 6.3 percent to 2.55 million cars and light vehicles, expects the European market to be “slightly better” in the remaining three quarters of this year than the first three months, when European market sales fell 10 percent after a “very poor performance,” Tavares said at a news conference in Istanbul May 14.

Renault was expecting a contraction in Europe of at least 3 percent this year while the worldwide car and light-truck market will expand 3 percent this year, with growth of as much as 11 percent in India, it said Feb. 14. Backed by the revamped Clio subcompact and budget Dacia Logan, the French automaker forecast that its global deliveries will rise this year, it said.

“We are having a product blitz, introducing new models this year,” Tavares said. Renault is broadening its product range by reviving the Alpine sports-car label and developing the Initiale Paris insignia into a full-fledged luxury brand, he said. Initiale will come to the market in a “10 to 15 years of time range,” he said.

Electric Vehicles

The carmaker expects to double its unit sales of electric vehicles, including Zoe and Fluence models among the four electric brands, globally this year from 18,000 units sold in 2012, Tavares said.

Renault doesn’t rule out making light commercial vehicles in Turkey, where its joint venture unit Oyak-Renault Otomobil Fabrikalari AS, Turkey’s biggest maker of cars, is producing Fluence and Clio 4 models, he said. The Turkish plant will make a record high of 340,000 cars this year, 20,000 short of its capacity, he said.

Renault’s plants in Romania and Morocco are becoming “cost-competitive” in terms of production costs and “Turkey may not be a benchmark in terms of cost anymore,” he said.

Turkish car and van sales are expected to grow about 3 percent to 780,000 this year, Ibrahim Aybar, chief executive of Renault Mais Motorlu Araclar Imal & Satis AS, the sales joint venture between Renault and Oyak Group, said on Jan. 8. Turkey’s total vehicle market contracted 11.5 percent to 815,000 units last year after a September tax increase on cars added to slower economic growth.

Tofas Turk Otomobil Fabrikasi AS (TOASO), a joint venture made up of Fiat SpA (F) and Koc Holding AS (KCHOL), as well as Toyota Motor Corp. (7203), Honda Motor Co. (7267) and Hyundai Motor Co. (005380) are among manufacturers of cars, vans, trucks and buses that sell local and imported brands in Turkey.

To contact the reporter on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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