Renault Group has announced that its global sales grew by 11.7% y/y during August, despite some sluggishness in its Africa-Middle East-India region.
IHS Markit perspective
- Significance: Renault Group has announced that its global sales grew by 11.7% y/y during August to 259,547 units.
- Implications: After hitting record sales during the first half of the year, the momentum behind Renault Group's growth shows few signs of abating.
- Outlook: IHS Markit anticipates that Renault Group's growth should be around 5.1% y/y in 2017, standing at almost 3.54 million units by the end of the year. We also forecast that it will build on this to hit around 4.15 million at the turn of the decade. However, it remains to be seen how the French automaker intends to contribute to the Renault-Nissan Alliance's strategy of achieving 14 million sales per annum by 2022.
The Renault Group's global sales recorded a further increase during August. According to the latest data published by the automaker, demand for passenger cars and light commercial vehicles (LCVs) this month has increased by 11.7% year on year (y/y) to 259,547 units. Of this, passenger cars made up a 12.9% y/y increase to 229,293 units, while LCV sales gained by 3.3% y/y to 30,254 units.
The automaker's ongoing positive sales growth performance has meant that sales in the first eight months of the year are now up by 10.7% y/y to 2,430,010 units.
The majority of its brands have recorded gains this month. The mainstay Renault brand has increased by 10.1% y/y to 178,616 units, as new and recent entries like the Kaptur, South American Captur, second-generation Koleos and fourth-generation Mégane were hugely influential. However, the re-entry into Iran has also resulted in a strong performance for the Sandero and Logan, while the Clio has also offered a smaller boost, as has the Oroch. Its low-cost Dacia had an even better month with sales up by 13.5% y/y at 45,423 units, as the Sandero surged this month, the Dokker improved and the soon to be replaced Duster lost no ground. The Lada brand – which has been included in the Renault Group's global sales since the start of the year by virtue of its majority stake in AvtoVAZ – rose 27.0% y/y to 28,507 units. This gain has been through a combination of its new and updated models like the XRAY and Vesta, alongside the existing entry level Granta, Largus and 4x4. However, sales of the South Korean Samsung brand have weakened again, this time sliding by 9.2% y/y to 7,001 units as the Talisman-based SM6 has been unable to maintain the sales levels seen after its introduction, while the replacement for the QM5, the QM6, has only seen a relatively modest improvement.
Renault Group's performance has improved in the majority of regions. This included its largest market Europe, where its sales have gained by 10.2% y/y to 105,870 units. Sales here have been underpinned by an 11.7% y/y gain in its domestic market France, which made up over 30% of European registrations. There has also been a positive contribution from Germany (+16.3% y/y), Italy (+21.7% y/y), Spain (11.6% y/y) and the Netherlands (+19.9% y/y), among others. However, declines have been recorded in Belgium/Luxembourg and the United Kingdom.
In Eurasia, the market has grown by 23.4% y/y to 59,227 units. This has been boosted by key markets across the region including Russia (24.2% y/y), Turkey (26.9% y/y) and Romania (+8.9% y/y). In the Americas, Renault Group's sales rose 11.1% y/y to 38,266 units as Brazilian sales rose 16.8% y/y and Argentina was up by 10.2% y/y. There was also a 21.3% y/y increase in Asia Pacific to 14,362 units. Although its sales in the South Korean market have retreated by 9.2% y/y, it continues to make inroads into China, having this month recorded growth of 126.3% y/y.
However, the exception to this growth on regional in regional terms has been its Africa, Middle East and India region. Here it recorded a dip of 0.5% y/y to 41,822 units. Although Iran has improved this month, up 27.1% y/y to 14,519 units, and Saudi Arabia has also seen gains, along with Morocco and South Africa. A 36.7% y/y decline in Algeria and a 26.1% y/y fall in India has offset this, along with a contraction in Egypt.
Outlook and implications
After hitting record sales during the first half of the year, helped by the inclusion of AvtoVAZ's Lada brand to the automaker's results, the momentum behind Renault Group's growth shows few signs of abating. Indeed, this includes its most established market Europe, where growth in the month is broadly in line with its global performance, although it is slightly more modest in the YTD. This is being supported by its ongoing programme of introducing attractive models into the market place as well as some degree of aggressiveness in its capturing of market share.
However, most of its ambitions and evidence of its recent successes lie outside Europe. This includes the returns on recent investments such as in China, as well as maintaining confidence in those that have struggled of late such as Brazil and Russia (although its performance in Russia is also being helped by market incentives). Even so, a strong increase may bring steep declines as initial market demand is fulfilled, as is the case in India where demand for the Kwid has slowed, although sales still remain relatively high.
Looking forward, Renault will continue to build its presence its markets outside Europe. This will include building on its position in Iran with the signing of a new joint venture (JV). Furthermore, Renault with its partner Nissan will be seeking to make a further push in to the electrified vehicle space in China with the introduction of a new JV with Dongfeng. New models will also look to help lift markets where sales have dropped off in recent times, such as the Captur's introduction in India.
IHS Markit anticipates that although the rate of growth of the Renault Group (including Lada) will not be as great as during 2016, it should be around 5.1% y/y in 2017, standing at almost 3.54 million units by the end of the year. We also forecast that Renault Group will build on this to hit around 4.15 million at the turn of the decade. It also remains to be seen how Renault Group will contribute to Renault-Nissan's new strategy for 2022 in which all the automakers involved in the Alliance – including Mitsubishi – are expected to see sales volumes reach over 14 million units. We should get an indication as to how it envisages this on 6 October, when the French automaker reveals its own strategic plan.
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