Renault posted better-than-expected sales in the first quarter on strong demand for new models such as the Arkana SUV and improved offerings of key components such as semiconductors. Group revenues rose 29.9% to 11.5 billion euros, the French automaker said, topping analyst estimates by 11.3 billion. Renault also confirmed its full-year outlook. «Renault Group has a good start to the year – said financial director Thierry Piéton in a note -. The strong order backlog at the end of March and all upcoming launches will continue to support the commercial activity of the group».
However, the French manufacturer’s shares plunged on concerns that price pressure across the auto sector threatens its recovery. Renault fell as much as 7.9% in Paris after Tesla confirmed that it prefers price cuts and volume increases even at the expense of margins. As years of supply chain bottlenecks have crowded automakers’ order books, customers increasingly struggle with inflation and interest rates. Tesla’s recent price changes complicate Renault CEO Luca de Meo’s efforts on the electric range.
Indeed, Renault will likely be forced to cut the prices of electric vehicles, including its Megane E-Tech, to generate the volumes it needs to meet emission limits in Europe, Bank of America analysts said in a statement. a note. Such a move would have a negative impact on profits. However, Piéton said during a conference call that the company will not drastically reduce the prices of the electric Megane, “a key product”.
Renault therefore had a brighter-than-expected start to 2023, but the inventory issue is likely to be a focus for investors, Jefferies analysts commented. The French automaker said total inventories as of March 31 stood at 580,000 vehicles, up from 480,000 vehicles as of December 31, due to ongoing logistics problems. This is the company’s highest level of inventory since before the COVID-19 pandemic. The increase in inventory in the quarter was solely due to the group’s inventories, including those from owned dealers, according to Jefferies.
