French Car Maker Renault Reports Drop In Revenues For The Fifth Straight Quarter

The French car maker Renault reported its fifth straight quarter of dropping sales as the company struggles to get out of the slump caused by the Covid-19 pandemic with the company reporting a 1.1 per cent drop in revenues of the company in the three months to March this year.

The current and changed strategy of the company is to make lesser number of cars focus on those with higher margins. This strategy which is showing positive signs for the company was drawn up under Chief Executive Officer Luca de Meo, who took the reins of the company last July.

During the quarter, the company benefitted from a rise in the prices of vehicles which was a boost for the company for the third consecutive quarter – during all of which Renault made a loss. However the boost from higher prices was not enough to make up for the hit to the company’s profits because of reducing inventories and other headwinds such as the impact of the unfavourable foreign exchange rates.

Just like many of its global rivals, Renault has also been hit by the acute global shortage of semiconductors that are used in cars while it has not been able to reap the benefits of a rebound in demand in the largest auto market of china as has been done by some of its European rivals including Daimler and Volkswagen.

Weak demand and sales forced Renault to quit its main passenger car business in the Chinese market last year which has made the company further dependent on its core European market – many parts of which are still under lockdowns imposed to tackle spread of the covid-19 pandemic

“We’re still far from being in a normal situation,” Renault finance chief Clotilde Delbos told a conference call. The group did not want to provide any financial guidance because of the very uncertain business environment, Delbos added during the call.

The overall sales of the company dropped to 10 billion euros ($12 billion) from a year earlier, said Renault which also makes the Dacia and Lada brands and also owns a financing unit. If the currency devaluation and other effects were taken out of the equation, that number would have been up by 4.4 per cent, the company said.

The sales by volumes of the Renault brand of cars was however up by 1.1 per cent during the quarter compared to the same quarter a year ago which however was minimal compared to the 21.2 per cent growth in sales for the company’s German peer Volkswagen during the same period.

De Meo is also carrying out cost cuts to try and redress the loss-making firm.

(Adapted from Reuters.com)

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