SUV demand helps French carmaker Renault post record profit

Renault reported first-half group revenue of €27bn, broadly in line with analyst estimates.

French carmaker Renault has posted its highest ever profitability in the first half of the year as the company benefited from lower raw material prices and robust demand for more expensive sport utility vehicles like the Austral and Espace.

Renault, like its peers Stellantis and Volkswagen, is navigating a challenging market in Europe, where demand for electric vehicles is slowing. Chief executive of the company Luca de Meo is betting on 10 new products this year including the battery-powered Renault 5 to re-energize sales.

Renault is relying on hybrid cars and other models of its budget-priced Dacia brand to make up for a dip in orders for its China-assembled Dacia Spring electric car after France tweaked its subsidy system to favour local production.

The company reported first-half group revenue of €27bn, broadly in line with analyst estimates. Net income was €1.4 billion, but included a €440 million capital loss from selling Nissan shares.

It said on Wednesday that its operating margin hit 8.1% beating the 7.9% projected by analysts. The French manufacturer confirmed its full-year guidance for operating profitability and free cash flow.

Renault shares are up 29% this year, the top-performing stock in France’s benchmark CAC 40 Index.

The car market in Europe has been quite volatile as the demand for electric cars recedes. EU tariffs on Chinese electric cars have also impacted many manufacturers including Volvo.  

Other carmakers including Mercedes-Benz, GM and even Tesla have adjusted their electric car ambitions because demand hasn’t met expectations. In Europe, the shift is faltering due to high sticker prices and the removal of subsidies by a number of governments.

Bloomberg