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Renault first-half sales volume slumps 30% after Russia exit
Global Banking & Finance Review®
Company
By Gilles Guillaume
PARIS (Reuters) -Car sales at Renault fell 30% in the first half of 2022 after the closure of its Russian operations, it said on Tuesday, one of the first Western carmakers to reveal the pain of losing the prized market in the wake of the Ukraine war.
France’s Renault, the most exposed to the Russian market among Western auto manufacturers, said its worldwide sales fell 29.7% from last year to just over one million vehicles.
Excluding the activities of its units Avtovaz and Renault Russia, the number of units sold was down 12% year-on-year. Renault shares fell 2.3%.
Russia was Renault’s second biggest market before the war, accounting for 15% of earnings, according to JPMorgan.
The group, which makes popular models such as the Dacia Duster and Renault Clio, stopped its activities in the country earlier this year and said it would sell Renault Russia and its 67.7% stake in Avtovaz, Russia’s biggest carmaker and owner of the Lada brand.
Avtovaz was sold to a Russian science institute, reportedly for just one rouble with a six-year option to buy it back, Renault said in May.
The French group also pointed to the semiconductor crisis as a factor behind the plunge in sales, although it gave an upbeat outlook on chip production for the second half of the year, echoing similar comments from rival Volkswagen.
Renault brand chief operating officer Fabrice Cambolive said the brand was seeing some improvement in terms of chip availability and expected further improvement in the second half of 2022. That in turn will help increase its production of cars.
Cambolive said that over the past few weeks, and particularly in June, the brand had seen car production levels recovering to match last year’s and even slightly above for some models.
He said Renault expected the trend to accelerate in coming months and forecast significantly higher production in the second half of the year compared to the first, although it would still not be enough to deliver on the company’s portfolio of orders.
“So acceleration, improvement of the situation, but globally a year which will remain under constraint,” he added.
Chipmakers have seen huge demand since late 2020 as higher orders from electronics manufacturers boosted by work-from-home practices led to supply crunches for other industries such as autos and telecom suppliers.
However, the chip shortage may turn into a glut. A significantly weaker-than-expected business outlook by memory-chip firm Micron Technology Inc at the end of June raised concern that the industry was turning toward a down cycle, given inflation-wary consumers are tightening their belts.
Renault said sales of electric vehicles had grown, as had the share of sales to private individuals in Europe.
Sales of electric and hybrid vehicles accounted for 36% of sales of passenger vehicles of the Renault brand in Europe in the first half of the year, against 26% a year earlier.
After the Russian exit, group sales outside Europe have fallen to 35% of the total, from 48% last year. Italy is now the group’s second biggest market after France.
(Additional reporting by Valentine Baldassari and Augustin Turpin; writing by Silvia Aloisi, editing by Kirsten Donovan)
A semiconductor crisis refers to a shortage of semiconductor chips, which are essential components in various electronic devices, including vehicles. This shortage can disrupt production and supply chains across multiple industries.
Electric vehicles (EVs) are cars that are powered by electric motors instead of traditional internal combustion engines. They are considered more environmentally friendly due to lower emissions.
Market exposure refers to the degree to which a company is affected by fluctuations in market conditions, such as sales declines or changes in consumer demand, particularly in specific regions or sectors.
Sales volume is the total number of units sold by a company during a specific period. It is a key indicator of a company's performance and market demand.
An investment portfolio is a collection of financial assets, such as stocks, bonds, and other securities, held by an investor to achieve specific financial goals.
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