Renault EV sales lift 3Q revenues despite lower volumes
By Gilles Guillaume and Dominique Patton
PARIS, Oct 29 (Reuters) - Renault Group RENA.PA reported a stronger-than-expected 1.4% rise in third-quarter revenue on Thursday, as higher sales of its popular electric models to retail customers in major markets such as France helped offset lower volumes and price pressure from Chinese competitors.
Revenue rose 1.4% at constant exchange rates to €11.6 billion ($13.0 billion), compared to an expected 0.3% decline in a company-compiled consensus of analyst forecasts.
Still, revenue growth at the French carmaker was slower than in the first half and may not be enough to reassure investors concerned about the fierce competition from a wave of Chinese entrants to Renault's key markets.
Renault's shares are down 26% so far this year to their lowest level in more than four years, piling pressure on CEO Francois Provost to demonstrate that the smallest of Europe's legacy automakers can survive major industry upheaval.
The group reported a 6% decline in third-quarter sales volumes to 497,799 vehicles, largely due to heightened competition in Europe and Latin America, regions targeted by Chinese car manufacturers.
For now, EVs, which accounted for 25.8% of its third-quarter sales, are boosting revenues. Electric vehicle sales under the Renault brand have climbed 75.2% since the beginning of the year, driven notably by the success of the electric Renault 5 and the arrival of the new Twingo, which leads its segment with 26,000 units sold since its launch.
Renault's strategy of prioritising retail sales, which are more profitable than sales to fleets or short-term rentals, is also helping. Retail sales represented 64.8% of the group's sales in Europe, it said, 20 percentage points above the market average.
But sales of its low-cost Dacia brand have continued to suffer from a lack of electric or hybrid options at a time when European consumers have switched to EVs to cut fuel costs. Sales fell 12.8% in the third quarter and competition is also rising, including in the C-segment, or mid-sized cars, which the brand has recently entered and faces "noticeable pressure from Chinese brands in Europe," Chief Financial Officer Duncan Minto told journalists on an earnings call.
The company confirmed its operating margin target of around 5.5% of group revenue, with a slight improvement in the second half, but said that would be tempered by higher raw material costs and inflation.
($1=0.8959 euros)