Renault Targets Growth in 2013 After Europe Hurts Sales
Sales fell 6.3 percent to 2.55 million cars and light commercial vans in 2012 from 2.72 million vehicles a year earlier, the carmaker said today in a statement. Deliveries dropped 6 percent at the main Renault brand while rising 4.8 percent at the low-cost Dacia marque.
Renault rose to a 10-month high after saying it plans in 2013 to bolster its share of the market in Europe, where the manufacturer has lost buyers to competitors such as Volkswagen AG. (VOW) The automaker is trying to reduce reliance on the region by building or buying factories in North Africa, China and Russia. Sales in 2012 outside Europe accounted for more than half of Renault’s deliveries for the first time, it said today.
“The internationalization is a reality,” Jerome Stoll, the head of sales, said at a press conference at Renault headquarters in the Paris suburb of Boulogne-Billancourt. “We’re clearly expecting a growth in volume in all regions, including Europe, on the basis of our forecasts.”
Renault jumped as much as 3.6 percent to 43.27 euros, the highest intraday price since March 14, and was trading up 2.5 percent at 11:47 a.m. in Paris. The stock has surged 34 percent in the past 12 months, valuing the carmaker at 12.7 billion euros ($17 billion).
The carmaker’s plan for European delivery gains contrasts with predictions by Chief Executive Officer Carlos Ghosn and other industry leaders that the region’s market will shrink a sixth consecutive year in 2013. Renault reiterated a forecast today that manufacturers’ sales in Europe this year will fall by about 3 percent.
“Renault will benefit from a better base effect than its competitors in Europe, especially given their new product range,” Xavier Caroen, a Paris-based analyst at Kepler Capital Markets who recommends buying the shares, said.
The company’s sales in its home market fell 25 percent to 551,314 cars and vans, reducing its group market share to 24.2 percent in 2012, Renault said. The manufacturer accounted for 26.1 percent of car sales in the country in 2011. Outside France, Renault’s deliveries in Europe fell 17 percent, it said.
The delivery drop and contracting European economy prompted Moody’s Investors Service to cut its long-term debt rating for Renault’s RCI Banque customer-finance division today by one level to Baa3, the lowest investment grade, from Baa2.
Non-European markets generated 50.2 percent of Renault’s deliveries last year compared with 43.1 percent in 2011, it said. Renault posted sales increases of 22 percent in the Eurasia marketing region, which includes Russia and other former Soviet states, and 14 percent in the Americas.
Sales in the Asia-Pacific region rose 0.4 percent as gains in China were offset by drop in South Korea, where the Renault Samsung division is reorganizing.
Renault began selling a new version of its Clio hatchback in the fourth quarter. The carmaker will hold an “event” every 10 days this year to introduce models, starting with the Captur, its first crossover, and including bringing new versions or updates of vehicles into new markets, Stoll said today.
Renault plans to eliminate 7,500 jobs through 2016 in France, including 5,700 posts that will disappear when employees retire or quit and aren’t replaced. It’s also holding talks with unions in France on ways to raise productivity, asking for a 6.5 percent increase in work hours and greater mobility between factories.
The job cuts are intended to reduce fixed costs by 396 million euros, Dominique Chauvin, head of the CFE-CGC union at Renault, said on Jan. 15. The carmaker doesn’t plan to shutter any factories, CEO Ghosn said that day. Gerard Leclercq, head of operations in France, said Renault will work toward an agreement with unions to ensure all departures are voluntary.
The workforce reductions are among 30,000 announced by carmakers in Europe since July because of the shrinking market. Manufacturers planning cutbacks through plant shutdowns include Paris-based PSA Peugeot Citroen (UG), General Motors Co. (GM)’s Opel brand in Germany and Ford Motor Co. (F) in the U.K. and Belgium, while Fiat SpA (F) is scaling back operations in Poland.
Renault plans to build a factory in Algeria near the city of Oran, with eventual annual capacity to produce 75,000 vehicles, the company said Dec. 18. As part of the expansion, the French manufacturer and Japanese partner Nissan Motor Co. (7201) are ramping up production at a 1 billion-euro plant in the Moroccan port city of Tangier.
Renault and Nissan signed a final agreement on Dec. 12 to take control of Lada-model maker OAO AvtoVAZ in Russia and invest 23 billion rubles ($759 million) in the new venture.
To contact the reporter on this story: Mathieu Rosemain in Boulogne-Billancourt, France, via firstname.lastname@example.org