Renault to rely on low-cost and electric cars to boost sales

Chief Executive Carlos Ghosn said that Nissan will roll out eight new battery-powered models and 12 hybrids. (AP)
Updated 06 October 2017
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Renault to rely on low-cost and electric cars to boost sales

PARIS: French carmaker Renault expects a first-mover edge in electric cars and a wider vehicle line-up for emerging markets to help it deliver a 44 percent sales increase by 2022.
Electric cars are “turning into a significant contributor to our performance while other automakers are just starting the journey,” Chief Executive Carlos Ghosn said on Friday.
Renault’s mid-term plan shows it growing faster than alliance partner Nissan, which it trails in China, due to recent investments in Iran and India and a Russian rebound.
While taking a lead in electric vehicles had come at the expense of profitability, Ghosn expects to turn this around by rolling out eight new battery-powered models and 12 hybrids.
“Our vision now is a profitable core business.”
Renault plans to increase sales to 5 million vehicles in 2022 from 3.47 million last year — while also targeting a 7 percent operating margin and €70 billion (SR308.23 billion) in revenue, goals that were announced in February.
Renault also said on Friday that its margin would stay above 5 percent over the intervening years, as it pursues €4.2 billion in cumulative productivity gains and invests €18 billion in research and development.
Renault shares rose 0.6 percent to €86.12 at 0757 GMT. The stock may be supported in coming weeks by “management’s increased confidence” on the mid-term goals, Evercore ISI analyst Arndt Ellinghorst said.
“This is good news in a world where most people fear earnings, cash flow and profitability will fall due to disruption,” Ellinghorst said.
China, where Renault only began manufacturing last year, is expected to account for half a million sales by 2022.
Renault’s budget car lineup, starting with the Dacia Logan in 2004, has underpinned the push into emerging markets and spawned a second car platform underpinning the Kwid mini-SUV, which has more than doubled the group’s sales in India.
Combined sales of the “Global Access” low-cost lineups are seen expanding 54 percent to reach 2 million vehicles, or 40 percent of the group total. An expanded utility van range is also expected to contribute to the emerging-markets surge.
The European share of Renault’s vehicle deliveries would shrink to 36 percent from 52 percent under the plan, with sales in the home region remaining broadly flat.
Renault had been transformed since 2005 — when he took over — from a carmaker dependent on French sales of Megane compacts into a “resilient, multi-polar global company,” Ghosn said.
Ghosn, who also heads the Renault-Nissan-Mitsubishi alliance, has not yet indicated whether he will seek to renew his Renault CEO contract, which expires next year.
Renault also outlined a new dividend policy on Friday, promising to increase shareholder payouts to 15 percent of earnings by 2022, from 7 percent last year.
In addition, it will continue to pass through its own Nissan and Daimler dividends to Renault shareholders. Renault owns 43.4 percent of its Japanese alliance partner and 3.1 percent of the Mercedes-Benz maker.


Japan, EU to sign widespread trade deal eliminating tariffs

Updated 9 min 30 sec ago
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Japan, EU to sign widespread trade deal eliminating tariffs

  • Both sides are heralding the deal, which covers a third of the global economy and more than 600 million people
  • Besides the latest deal with the EU, Japan is working on other trade agreements, including a far-reaching trans-Pacific deal

TOKYO: The European Union and Japan are signing a widespread trade deal Tuesday that will eliminate nearly all tariffs, seemingly defying the worries about trade tensions set off by President Donald Trump’s policies.
The signing in Tokyo for the deal, largely reached late last year, is ceremonial. It was delayed from earlier this month because Japanese Prime Minister Shinzo Abe canceled going to Brussels over a disaster in southwestern Japan, caused by extremely heavy rainfall. More than 200 people died from flooding and landslides.
European Council President Donald Tusk and European Commission President Jean-Claude Juncker, who arrived Monday, will also attend a gala dinner at the prime minister’s official residence.
Both sides are heralding the deal, which covers a third of the global economy and more than 600 million people.
The deal eliminates about 99 percent of the tariffs on Japanese goods to the EU, but remaining at around 94 percent for European imports into Japan for now and rising to 99 percent over the years. The difference is due to exceptions such as rice, a product that’s culturally and politically sensitive and has been protected for decades in Japan.
The major step toward liberalizing trade was discussed in talks since 2013 but is striking in the timing of the signing, as China and the US are embroiled in trade conflicts.
The US is proposing 10 percent tariffs on a $200 billion list of Chinese goods. That follows an earlier move by Washington to impose 25 percent tariffs on $34 billion of Chinese goods. Beijing has responded by imposing identical penalties on a similar amount of American imports.
Besides the latest deal with the EU, Japan is working on other trade agreements, including a far-reaching trans-Pacific deal. The partnership includes Australia, Mexico, Vietnam and other nations, although the US has withdrawn.
Japan praised the deal with the EU as coming from Abe’s “Abenomics” policies, designed to wrest the economy out of stagnation despite a shrinking population and cautious spending. Japan’s growth continues to be heavily dependent on exports.
By strengthening ties with the EU, Japan hopes to vitalize mutual direct investment, fight other global trends toward protectionism and enhance the stature of Japanese brands, the foreign ministry said in a statement.
The EU said the trade liberalization will lead to the region’s export growth in chemicals, clothing, cosmetics and beer to Japan, leading to job security for Europe. Japanese will get cheaper cheese, such as Parmesan, gouda and cheddar, as well as chocolate and biscuits.
Japanese consumers have historically coveted European products, and a drop in prices is likely to boost spending.