Business / Corporate

Renault makes cuts to outlook expecting global auto woes to deepen

Bloomberg

Renault SA has cut its outlook for the global auto market, expecting demand to shrink by around 4 percent this year after the French carmaker slashed its forecasts.

The manufacturer previously expected the market to decline by 3 percent. In Renault’s main market of Europe, which accounted for half of vehicle sales last year, demand is likely to fall by as much as 1 percent compared with an earlier prediction for a flat market, Renault said Friday.

The company shocked investors last week with a cut to revenue and profitability expectations, rattling confidence about the carmaker’s grip on operations among a litany of woes. Fresh from a top management shake-up, Renault said it would need to make some choices on spending and review longer-term strategy as markets contract and costs mount to meet new emissions rules.

Within the past year, Renault has weathered the arrest of former CEO Carlos Ghosn on allegations of financial misconduct, which he denies, laying bare as-yet-unresolved tensions with partner Nissan Motor Co. The Japanese manufacturer has since torpedoed a plan for Renault to merge with Fiat Chrysler Automobiles NV.

Nissan, where Renault has a 43 percent stake, is battling its own challenges, including a slide in profits and mass job cuts.

Renault is currently looking for a new CEO with automotive and international experience, after ousting Thierry Bollore and appointing Clotilde Delbos as interim chief this month.

Renault Chairman Jean-Dominique Senard piled on the pressure this week to mend relations with Nissan, frayed by a lopsided shareholding structure that gives the French company an outsized say. Senard is keen to see fixes bear fruit next year, putting a band of new managers on notice just as a global downturn in the automotive sector takes hold.

During the third quarter, vehicle deliveries in Europe dropped 3.4 percent even as the market rose 2.4 percent, the company said, blaming a strong year-ago comparison and a revamped Clio model that’s still being rolled out in the region. Some versions of the new Clio have experienced delays, a spokesman said.

The decline mostly affected the Renault brand, with vehicle sales down 10 percent. At the low-cost Dacia nameplate, deliveries jumped 9.3 percent.

In China, the world’s biggest car market and one where Renault has struggled to grow beyond a limited presence, sales plunged 16 percent, outpacing the market decline threefold.

The troubles at Renault contrast with cross-town rival PSA Group’s defiance of the automotive slump with a band of revamped models. PSA managed to lift third-quarter revenue even as unit sales fell slightly.

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