Renault to rely on low-cost and electric cars to boost sales
Renault to rely on low-cost and electric cars to boost sales
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.
2 years on, Brexit vote has taken a toll on UK economy
- Big companies are sounding the alarm bell, with plane making giant Airbus this week threatening to pull out of the country, where it employs 14,000, if it gets no clarity on future trade deals
- The governor of the Bank of England, Mark Carney, estimated recently that average household incomes are around 900 pounds lower than the bank was forecasting on the eve of the referendum
LONDON: While it’s still unclear what Brexit will look like when it happens next year, the decision to leave has already had a clear effect on the economy: households are poorer, companies are more cautious about investing, and the property market has cooled.
In the two years since the vote to leave the European Union, Britain has gone from being a pace-setter among the world’s big economies to falling into the slow lane. And the uncertainty over what relations with the EU will be when Brexit becomes official on March 29, 2019 could make matters worse.
Prime Minister Theresa May’s Conservative government remains split on what those relations should be. There are those who favor a “hard Brexit,” a clean break that takes Britain out of the bloc’s free trade union but also gives it more freedom to strike new trade deals around the world. Others want to keep Britain as close as possible to the EU, Britain’s biggest trading partner, which could mean it has to obey more of the bloc’s rules.
Big companies are sounding the alarm bell, with plane making giant Airbus this week threatening to pull out of the country, where it employs 14,000, if it gets no clarity on future trade deals.
“Thousands of skilled, well-paid jobs are now on the line because of the shambolic mess the government have created over the Brexit negotiations,” said Darren Jones, the lawmaker for the community where Airbus has its plant.
Before the referendum of June 2016, the British economy had been one of the fastest-growing industrial economies for years. Now, it’s barely growing. In the first quarter of this year it expanded by just 0.1 percent from the previous three-month period, its slowest rate in about five years.
For most people, the first and most noticeable impact was the drop in the pound. The currency slid 15 percent after the vote in June 2016 to a post-1985 low of $1.21. That boosted prices by making imports and energy more expensive for consumers and companies — the rate of inflation hit a high of 3 percent late last year.
The weaker pound helped some companies: exporters and multinationals that do not sell mainly in the UK But it hurt consumer spending and businesses that depend on their shopping. The retail industry was hit hard, with high-profile companies like Toys R Us and Maplin going bust, and supermarket chain Marks and Spencer planning deep cuts.
While prices rose, wages lagged, even though unemployment is at its lowest since 1975, at 4.2 percent.
“After Brexit, prices definitely went up,” said Nagesh Balusu, manager of the Salt Whisky Bar and Dining Room in London. “We struggled a bit earlier this year, so now we’ve increased the prices.” The bar is next to Hyde Park, a popular destination for foreign visitors. “The tourists have a good exchange rate. They know they can spend a little bit more than they usually do. But the locals are coming a little less. They are starting to think about how much they spend.”
The governor of the Bank of England, Mark Carney, estimated recently that average household incomes are around 900 pounds lower than the bank was forecasting on the eve of the referendum.
The real estate market, meanwhile, has cooled considerably, with the number of property sales in London near a historic low last year, according to estate agent Foxtons.
While some foreign prospective buyers were attracted by the drop in the pound, others seem to have been scared off by uncertainty over what Brexit might mean for their investment.
House prices are stagnating after years of gains, also due to expectations that the Bank of England will keep gradually increasing interest rates.
Nic Budden, Foxton’s CEO, predicts that the real estate market will remain challenging this year, while Samuel Tombs, analyst at Pantheon Economics, predicts that house prices will flatline for the next 6 months.
Against the backdrop of uncertainty, businesses have become more reluctant to invest in big projects. Because Brexit could lead to tariffs on EU imports of British goods, companies are hesitant to spend big on British plants and office space before they know what the new rules will be.
Benoit Rochet, the deputy chief of the port of Calais, the French town across the Channel from Britain, complained to a parliamentary committee this month that “we know there is Brexit but we don’t know exactly what Brexit means.”
“You are not alone,” responded the Conservative chair of the committee, Nicky Morgan.