Renault Group reports 3.2% gain in global sales during 2014

Renault has announced a 3.2% year-on-year (y/y) improvement in the group's global sales during 2014. According to a statement, the number of light vehicles sold during the year reached 2,712,432 units, compared with 2,628,183 units during 2013. Of this total, passenger cars accounted for 2,368,090 units, a gain of 2.8% y/y, while light commercial vehicle (LCV) demand reached 344,342 units, up 6.4% y/y.

On a brand basis, the Renault brand led the way with sales of 2,118,844 units, although this was a contraction of 0.6% y/y, as while LCV demand witnessed an increase of 4.7% y/y to 307,501 units, passenger car sales dipped by 1.4% y/y. However, the weak performance of this brand was largely offset by the gains recorded by Dacia. The Romanian low-cost brand recorded an increase of 19.1% y/y during the year to 511,465 units, driven by a 18.8% y/y increase in passenger car sales to 474,624 units. The group's improvement was also supported by a reversal of fortunes for the South Korean Renault-Samsung brand, which recorded an increase in sales of 22.4% y/y to 82,123 units.

On a regional basis, the group's gains in 2014 were representative of the rebound recorded in the European market that it has seen. Sales in the region increased by 12.5% y/y to 1,464,611 units, and the lion's share of these gains stemmed from improvements outside of its French domestic market which recorded an increase of 17.6% y/y to 887,010 units. Here it was seen to have increased its market share in nearly all its markets, with significant double-digit gains having been recorded in the United Kingdom, Italy, Spain, and Portugal. However, the group's sales in its French market were also seen to increase by 5.5% y/y to 577,601 units, an improvement that outpaced the market as a whole.

Asia-Pacific was the other regional market where gains were recorded during 2014. Here demand was seen to increase by 23.0% y/y to 133,172 units, as the revival of its Renault-Samsung brand drove improvements, supported by the introduction of the Renault Captur-based QM3.

However, weaknesses were seen elsewhere. Among them were the Americas, where a decline of 10.7% y/y was recorded to 416,934 units. Here it was hampered by the economic and market situation in Argentina. Renault said it had decided to reduce its exposure to the Argentine peso by reducing imports; therefore, seeing a fall in sales locally of almost 40% y/y. Renault added that it had seen a flattening of sales in Brazil, which remains its second-largest market globally behind France, while in Colombia it had seen a 13.5% y/y improvement. It had also suffered a 9.2% y/y fallback in sales in the Africa, Middle East, and India market to 308,012 units, as key markets in the region such as North Africa and India dipped. Finally, Eurasia also saw a slide of 5.4% y/y to 389,703 units. While in Romania it witnessed an increase of 21.3% y/y, declines were seen in Turkey and Russia, although it noted that it saw an improvement in its market share.

Outlook and implications

As can be seen by the final results, Europe continued to be a big influence on the automaker's sales globally. The gains seen by this region during the year, which not only includes the EU28 markets, but also the European Free Trade Association (EFTA) markets and five Balkan states, also increased its share of sales globally from 49.5% to 54.0%. This performance was helped by the turnaround recorded in many markets, some of which had been at an exceptionally low ebb, including the incentive-enhanced Spanish market. It was also helped by restructuring undertaken in some markets and the benefits of recently introduced and enhanced models such as the Dacia Duster and Sandero, as well as the Renault Captur, which continued to perform well after taking the brand into the sub-compact crossover space for the first time.

However, the group's weaker performance in its international markets stemmed from a myriad of factors that came to pass throughout the year. In the Americas, while higher taxation and firm interest rates limited vehicle sales in Brazil, Renault seemed to partly shrug this off. However, the Argentine market was thrown into turmoil throughout 2014 by the government applying a luxury-car tax that affected some of the most popular models, and the depreciation of the country's peso made imported vehicles more expensive. Additionally, a loan underwriting scheme in the second half of the year helped very little.

While Renault made a small gain in its market share in the Russian market, it undoubtedly came under some pressure during the year from the growing political and economic issues that emerged, not helped by sanctions related to the Ukraine conflict and the plummeting exchange rate of the Russian rouble. This led Renault to partly suspend sales of some vehicles and raise the price of others to offset the impact (see Russia: 22 December 2014: Renault-Nissan CEO describes rouble decline as a "bloodbath" for OEMs). This is likely to see a further impact during 2015 for the group, as the AvtoVAZ brand is also now being forced to undertake some measures (see Russia: 14 January 2015: AvtoVAZ to raise Russian prices by 9% as rouble devaluation continues to hit OEMs). Nevertheless, Renault's and others' involvements in this market are very much long-term plays despite the short- (and possibly medium-) term risks.

Renault has also noted that it saw its global light-vehicle sales increase just behind the 3.5% y/y increase of the overall global light-vehicle market during 2014. It did this without having significant access to the Chinese market, which helped drive PSA Peugeot-Citroën's sales during 2014, for example (see World: 14 January 2015: PSA's global sales rise 4.3% y/y driven by China, Europe). Renault will largely remain dependent on imports during 2015 as well, but beyond this will open a new joint venture (JV) factory with partner Dongfeng, which should generate a large uplift if this move goes to plan. This will be part of efforts to widen its international market access going forward, with the company having undertaken or earmarked further investments in North Africa and the Association of Southeast Asian Nations (ASEAN) region as well.

Looking forward, Jérôme Stoll, Renault executive committee member, chief performance officer, and executive vice-president for sales and marketing, said, "In 2015, in a market context that remains uncertain, we will continue to move ahead with our Medium-Term Plan, Renault Drive the Change. We are forecasting an increase in our global volumes, the strengthening of our position in Europe and improvements in our positions on our main emerging markets. Our growth will be sustained by an accelerated product plan, with five new models." The group has highlighted that the global market is expected to record a modest growth of 2% y/y, with the European market also expected to grow by 1-2%, as France remains flat. IHS Automotive expects that the Renault Group (excluding AvtoVAZ) will achieve global sales growth of just under 5% y/y during 2015. We also see global sales hitting over 3.4 million units during 2020.