After a strong performance in the first quarter, Renault Group's sales growth rates slowed to 1.8% y/y during April as selling days come into play in Europe.
IHS Markit Perspective:
- Significance: Renault Group's sales increased by just 1.8% y/y during April, although growth remains at double-digit percentage rates during the YTD.
- Implications: The situation is partly down to working day factors, particularly in its largest market of Europe. However, there is certainly some suggestion that it will continue to make headway in key growth markets.
- Outlook: 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% y/y in 2017 standing at almost 3.54 million units by the end of the year.
After a strong performance in the first quarter, Renault Group's sales growth rates slowed during April. According to the latest data released by the automaker, sales of its passenger cars and light commercial vehicles (LCVs) have grown by 1.8% year on year (y/y) to 294,457 units. Of this, passenger cars have increased 2.9% y/y to 259,656 units, while its LCV sales have slid by 6.0% y/y to 34,801 units.
Nevertheless, in spite of the slowdown during the month, growth remains at double-digit percentage rates during the year to date (YTD). Renault's light-vehicle sales now stand at 1,168,476 units, a gain of 12.0% y/y.
In terms of the monthly data, its brand sales have improved to a small degree. Mainstay brand Renault has increased by just 0.8% y/y to 204,919 units. The brand was lifted by the performance of its passenger cars, including the second-generation Koleos, fourth-generation Mégane, Talisman, Kadjar and this brand's version of the Sandero. However, this performance was offset by weaker sales among its LCV range, but mainly the Master. Its low-cost Dacia rose by a more substantial 3.5% y/y, helped by the Dokker, Lodgy and Sandero. The Lada brand – which is now included in the Renault Group's global sales by virtue of its majority stake in AvtoVAZ – recorded a gain of 6.0% y/y to 28,015 units. Although the brand has dropped a number of older vehicles from its line-up, new and updated models like the XRAY and Vesta have helped, alongside the older Largus and 4x4. However, unlike the strong performance put in during earlier months, its South Korean Samsung brand has made another more modest improvement during April, with sales up by just 1.9% y/y to 8,702 units as the SM6 has now turned over 12 months old and seen some declines, although this has been offset by the new QM6 crossover.
On a regional basis, the main cause of this weakness has been its more sluggish performance in Europe. Sales here have fallen by 3.5% y/y to 152,417 units. While Germany has been flat and Italy, Portugal, the Netherlands and Poland have put in a positive performance, other markets have been less buoyant for the automaker. These include France, the United Kingdom, Spain, Belgium, Switzerland, Sweden and Denmark.
In its Africa, Middle East and India region, it has recorded a gain of 11.4% y/y to 37,509 units. Iran has been the key to this growth in the month, with its sales there jumping by 98.7% y/y to 7,053 units. There was also a strong 54.6% y/y gain in Algeria, 16.7% y/y improvement in Morocco and registrations in Saudi Arabia more than doubled. However, these gains were partly offset by the 23.2% y/y decline recorded in the Indian market to 9,545 units, underlined by a weaker month for the Kwid in the model data.
In the Americas, Renault Group's sales rose 2.7% y/y to 28,765 units as a strong 15.6% y/y gain in Argentina combined with a decline of just 2.1% y/y in Brazil, a far better performance than in some previous months, although undoubtedly helped by the low base of comparison. In its Eurasia market, Renault Group sales are up 2.8% y/y to 59,189 units. It benefited from a stronger performance in Russia, where it gained by 10.3% y/y. Furthermore, both Romania and Ukraine offered further gains. The only real dark spot has been its performance in the Turkish market where it declined by 12.8% y/y.
The biggest percentage improvement for the OEM this month has again been Asia Pacific. Its sales here have jumped by 37.5% y/y to 16,577 units. As its sales in South Korea have flattened at a higher level on another new model, this improvement has been supported by production now taking place in China which has helped to lift its sales locally from 2,002 units to 6,335 units.
Outlook and implications
The rate of gain recorded by Renault Group during April has been far weaker than in some earlier months. However, part of the reason for this has stemmed from working day factors. Firstly, the month saw one additional working day compared to the same month a year ago. However, in some regions – although predominantly its largest, Europe – there has been some impact caused by public holidays related to Easter falling this month against March during 2016. In some markets, this caused a further two fewer working days. This helps to even out the upswing caused by the low base of comparison in March caused by this factor, and it might take another month before we can gauge how the automaker is currently faring in the world.
Nevertheless, there appear to be plenty of reasons for Renault to be optimistic outside Europe. For one, it is gaining traction in the Chinese market with its locally built Kadjar and now the second generation Koleos crossovers. This is taking place in a market which is starting to show signs of slowing and where more established Groupe PSA has seen its sales this month fall by half. Over the next few years, it will add the Espace, Talisman and eventually, Captur. Furthermore, it has seen some improvement in Russia. However, it remains to be seen whether this is down to its persistence in the market or the state stimulus programme, which helped with the acquisitions of two-thirds of Ladas in the first quarter of the year, according to reports. Furthermore it is continuing to rebuild itself in the Iranian market after the dropping of sanctions. It will further develop its share in future as a new joint venture (JV) in the country brings new models to market.
After successfully completing its six-year business plan at the end of 2016, we are now waiting for Renault to announce the next phase of the strategy, which could give some indication as to how it intends to expand its footprint outside Europe (which for the first four months of 2017 now stands at 46.0%). For now, 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% 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 4.05 million at the turn of the decade.
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The above article is from AutoIntelligence Daily by IHS Markit. AutoIntelligence Daily provides same-day analysis of automotive news, events and trends. Get a free trial.