Renault reported better-than-expected sales in the first quarter on robust demand for new models such as the Arkana sport utility vehicle and improving supply of key auto parts such as semiconductors.
Group revenue rose 29.9 per cent to €11.5 billion, the French carmaker said Thursday, above analyst estimates of €11.3 billion. Renault also confirmed its full-year outlook.
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“Renault Group is off to a solid start in the year,” chief financial officer, Thierry Piéton, said in a statement. “The strong order book at the end of March and all forthcoming launches will keep supporting the group’s commercial activity.”
While years of supply-chain bottlenecks have left carmakers with record order books, high inflation and interest rates are expected to weigh on future demand. Tesla’s recent moves to slash prices for its EVs in Europe complicate Renault chief executive Luca de Meo’s efforts to keep stickers elevated even as parts shortages ease.
Renault will probably be forced to reduce prices for EVs, including its Megane E-Tech, to generate the necessary volumes it needs to comply with emissions limits in Europe, Bank of America analysts said in a recent note. If Renault addresses the concerns by lowering Megane prices, it would have a negative impact on earnings, the analysts wrote.
Earlier this year, de Meo signalled the company wouldn’t follow Tesla’s price cuts, branding its US competitor’s strategy as risky. The manufacturer is pushing ahead with a deep revamp of its business.
Renault is also working on reaching a final agreement with Japanese partner Nissan that will allow the companies to rebalance their troubled two-decade alliance. De Meo has pursued the deal as he seeks to split Renault’s businesses and work with new partners amid the industry’s transition to EVs and increasingly sophisticated software. – Bloomberg
