Renault sees ‘tense’ auto market in 2010

Renault sees ‘tense’ auto market in 2010

Boulogne-Billancourt, France: Renault SA said Thursday that sales of cars and light trucks fell 3.1 percent last year, despite a year-end surge as car buyers sought to benefit from government scrappage schemes before they are phased out.

Renault said in a statement that as these incentives end, the market will remain “tense" in 2010.

France’s second largest car marker sold 2.31 million vehicles in 2009, down from 2.38 million in 2008. In December, Renault saw a 40% increase in unit sales to 206,702 vehicles.

Jerome Stoll, head of sales, said it is difficult to predict how markets will react to the phasing out of the scrappage schemes.

“We will manage the reduction of scrappage incentives by continuing to try to win market share while being vigilant about the financial situation of the group," he said in a press conference at Renault’s headquarters in Boulogne-Billancourt, outside Paris.

France, like other governments, is cutting back on the incentive program, which initially offered a €1,000 ($1,440) bonus for trading in old cars for new ones.

In the first half it has been cut to €700 in France, although Renault has said it will make up the difference until the end of February.

Stoll said he will look at what competitors are doing and how markets are working to decide what happens in March.

“Competition will be tough in 2010," he said.

Renault expects the European market to fall between 8 and 10% this year.

The 3.1% decline in vehicle sales masks clear differences between regions and between the Renault and Dacia brands owned by the group.

Renault unit sales dropped by 7.8%, while those of Renault’s low cost Romanian unit Dacia grew by 20.5%.

Unit sales rose 1.5% in Europe, but fell by 10.9% in Renault’s other markets, pulled down by the collapse of car sales in countries like Russia.

Renault said its market share rose by 0.1 points to 3.7% in 2009 and that it plans to increase that further this year.

In France, Renault’s home market, market share rose by 0.6 points to 26% with sales volumes up 7.3%.

Market share rose in 11 of Renault’s 15 biggest markets, but fell in Britain, Brazil and Iran.

The results compare to cross-town rival PSA Peugeot Citroen SA, which said its sales of cars and light trucks slid 2.2% last year to 3.19 million units.

Asked about mounting controversy in France about the possibility of Renault producing some of its popular Clio small cars in Turkey, Stoll insisted that “Renault is clearly a French group."

French President Nicolas Sarkozy, who has summoned CEO Carlos Ghosn to his Elysee palace in coming days, on Wednesday complained that large companies like to think they “no longer have a nationality."

Stoll noted that the cost of making a car in Turkey is €1,400 cheaper than France.

“This gap exists," he said. “We need to make sure we remain competitive."

Renault is studying the possibility of dividing production of the Clio 4 between plants in France and Turkey.