Renault Group has announced that it has recorded a 0.7% y/y increase in global registrations during H1 2015, despite the struggles in markets outside Europe.
IHS Automotive perspective | |
Significance | Renault Group has announced its global sales results for the first six months of 2015; sales have increased by 0.7% y/y to 1.376 million units. |
Implications | The fall during this timeframe has been caused by the weakness in some markets outside Europe, and particularly those which have underpinned growth in the past. |
Outlook | While Renault anticipates further growth during 2015, IHS Automotive expects that the group (excluding AvtoVAZ) will see a marginal downturn in global registrations of 0.25% y/y to 2.65 million during 2015, brought about by the pressures in regions that are already causing an impact. |
The Renault Group has announced a marginal increase in its global sales during the first half of 2015. According to a statement released by the automaker, sales have increased by 0.7% year on year (y/y) to 1.376 million units. This has been made up of 1.192 million passenger cars, a decline of 0.4% y/y, although light commercial vehicle (LCV) sales increased 8.4% y/y to 183,820 units.
On a brand level, the key Renault brand has struggled during this time with sales down by 1.4% y/y to 1.049 million units, as its passenger car sales fell back by 3.0% y/y to 885,324 units. However, its low-cost Dacia brand rose 10.0% y/y to 289,610 units, underpinned by a 9.7% y/y increase in sales of its passenger cars to 269,451 units, while it LCV sales were up by 13.6% y/y to 20,159 units. Even so, passenger car sales at its South Korea-based Renault Samsung Motor unit fell 3.9% y/y to 37,268 units.
On a regional basis, the majority of the gains during the first half of 2015 have stemmed from its key European market. Here, registrations have grown by 9.3% y/y to 849,088 units, with the French market up 3.7% y/y to 325,365 units, as the rest of Europe recorded an improvement of 13.0% y/y to 523,723 units. The gains outside the automaker's domestic market here have been supported by the Italian and incentive-led Spanish markets, where sales rose 24.4% y/y and 30.9% y/y, respectively. It has been boosted by popular models such as the Clio, Captur, Twingo, Master and Traffic, it added.
Another market that has improved - albeit more marginally - has been Africa, Middle East and India. Sales have increased by 0.7% y/y to 150,735 units.
However, other regional markets around the world have been more troubled. This included the Americas region, which for the automaker predominantly on South America. Sales have tumbled by more than one-fifth from 205,691 units during the first half of 2014 to 163,223 units. It has not been helped by a 18.7% y/y decline in Brazil to 89,527 units, although it added that it has managed to increase its market to 7%. There was also a severe drop in Argentina of 39.8% y/y to 31,808 units as Renault noted that it had chosen to limit its exposure to the Argentine peso through reducing imports.
In its Eurasia market, sales have retreated by 10.2% y/y to 159,196 units during the first half of 2015, as sales in the Russian market fell 37.1% y/y to 57,116 units. Nevertheless, the situation in Russia was partly offset by the automaker's buoyancy in Turkey, where it increased 35.3% y/y to 67,856 units, and Romania, where there was a 24% y/y improvement. Renault's performance in Asia-Pacific has also weakened with registrations declining by 5.6% y/y to 53,621 units. While its sales in South Korea marginally improved, the Group saw a sharp decline of sales in China of 45.5% y/y.
Outlook and implications
The results for the first half of the year underline a situation that Renault has been noting since the beginning of the year: that its performance is struggling outside Europe. Data supplied by the company has shown that sales outside this region are down by 10.6% y/y to 526,775 units. By this measure, with the market in Europe having grown, Renault's market share has fallen away further from its targeted 50% to 38.3% during the first half of 2015.
The main reason for this has been that growth in a number of the key emerging markets that it has targeted has stalled and even reversed. In South America, the Brazilian and Argentine markets having weakened on their respective economic woes which has hit light vehicle demand. Russia is another market where it has suffered from a range of not only macroeconomic but also diplomatic factors which is reducing the ability for consumers to enter the market, despite the government putting in place incentives to stimulate demand. Not reflected in this data, but Renault's exposure to this has been widened in recent times through its major shareholding in local automaker AvtoVAZ.
Nevertheless, many of these situations are seen as short- and medium-term issues by the company, and has not stalled long-term investments that are being made. Indeed, Renault announced investments in Argentina during the first quarter along with partner Nissan (see Argentina - Brazil - Mexico: 12 March 2015: Renault plans USD100-mil. investment in Argentine plant, considers Mexican factory, to launch updated models in Brazil), while investments in AvtoVAZ continue to gain.
It is also looking to improve its position where it is weaker. This includes passenger car production in China coming on stream for the first time, with its aim to target the market with crossovers and other popular models with its partner Dongfeng. It will also make a renewed effort on the Indian market with its new A-segment Kwid, which it hopes will appeal to Indian customers with its crossover-style looks.
Closer to home, in Europe, after already recording success with its recent launches – with the latest being the Kadjar crossover – the company will continue its new model rollout strategy. Indeed, earlier this week it revealed the Talisman sedan with which it intends to replace the moribund Laguna (see France: 7 July 2015: Renault reveals new D-segment Talisman). This will be followed by the replacement for the Mégane.
Looking back at the near term, Renault has suggested that overall light-vehicle demand in the European market should remain buoyant for the rest of the year, offsetting the declines suffered in South America and Russia, as well as a slowdown in China. The automaker adds that it should benefit from the launch of the Espace and Kadjar, as well as the Lodgy and Kwid in India. This has led to the reiteration of its target for continuing growth in its global sales volumes, strengthening the Renault brand in Europe and improving its position in key emerging markets.
However, IHS Automotive expects that the Renault Group (excluding AvtoVAZ) will see a marginal downturn in global registrations of 0.25% y/y to 2.65 million units during 2015, its position being helped by the upswing in Europe. However, we see a considerable improvement to over 3 million units in 2016, while its global sales will get to almost 3.47 million units during 2020, and almost 4.0 million units including AvtoVAZ.