Renault Touts Its Plans For Latin America.
“Renault Americas looks set to be on the cusp of a boom in sales”
Renault’s revelation Europe would take second place to the rest of the world in the long-term plan to 2022 was greeted without excitement. But a sponsored trip to Brazil later in the month for investors generated some enthusiasm.
Renault’s Drive the Future plan will raise sales 40 per cent to 2002 from 2016 to more than €70 billion with unit sales of Renaults, Dacias and Ladas jumping 40 per cent to 5 million a year. 60 per cent of sales will be generated internationally, with China jumping to 550,000 from 35,000 in 2016.
At the meeting in October, Renault said the amount of profit generated by Europe would decline through 2022, but overall operating profitability would rise to 7 per cent from 6.4 per cent in 2016.
Renault took investment bankers to Brazil to show how serious it was about Latin America.
“Renault Americas looks set to be on the cusp of a boom in sales and given the apparent low (ish) level of fixed costs together with high utilisation, an even bigger lift in profits,” said Citi Research analyst Michael Tyndall.
Tyndall said Latin America is small in Renault’s universe, but growing, with sales of 354,000 in 2016 moving up to about 400,000 this year.
Investment researcher Evercore ISI liked what it saw, saying the trip confirmed Renault’s unique position in the region.
Renault forecasts overall sales in the region will hit 5.9 million this year, up 8 per cent, and 6.2 million in 2018, up 4 per cent. Renault expects to outpace this sales rate itself.
“This will be driven by an unprecedented product offensive in the region, gaining momentum in segments it has not traditionally had exposure to – pickups, A-segment SUV Kwid) while adding richer, younger, platform-based product to the segments in which it is already competitive,” Evercore ISI said.
Meanwhile earlier in the month, Renault announced the government’s stake in the company had returned to 15 per cent. In April 2015 France raised its stake to almost 20 per cent to secure double voting rights, after shareholder Nissan appeared to seek more influence.