 "Renault Q1 sales lifted by financing arm, 2024 profit rises 2% at $12.5 bn")
French automaker Renault posted a 1.8 per cent rise in first-quarter revenue on Tuesday, with high interest rates lifting sales at its financing arm, and reiterated its profit margin and cash flow forecast for 2024 as it pushes ahead with cost cuts.
Renault is in the middle of a turnaround plan while also accelerating a shift to electric models and is launching seven new models this year, including two new fully electric models and two hybrids.
The global auto sector is bracing for a tough year amid slowing demand growth for electric vehicles, adding another challenge to companies already battling fierce competition from China.
A lack of affordable options has been a major stumbling block for broader mass adoption of EVs. Renault Chief Financial Officer Thierry Pieton told reporters that the French automaker was on track to lower its EV costs by 40 per cent by 2027.
Sales volumes at Renault, maker of the Clio and Twingo, returned to growth last year after declining for four years in a row, but prices are under pressure due to weak global demand.
The Renault group sold 549,099 units during the first quarter, up 2.6 per cent from the same period in 2023.
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Leading EV maker Tesla is cutting prices in several key markets, piling more pressure on European firms.
Tesla cut the price of its Model 3 to $39,990 in Renault's home market, matching the starting price of the French firm's new EV Scenic, which has a lower range.
Pieton said Renault would pass on cost reductions to customers through lower costs for new models rather than slashing prices.
Renault reported revenue of 11.7 billion euros ($12.5 billion) for the first quarter, above analyst estimates of 11.49 billion euros.
But automotive revenue eased 0.7 per cent to 10.47 billion euros, hurt by foreign exchange rates in markets like Argentina and Turkey.
Renault said its sales volumes rose 2.6 per cent in the quarter, but revenue in its core automotive business fell as independent dealers carried out higher destocking than in the corresponding year-earlier quarter.
Revenues from financing activity grew 27.9 per cent to 1.25 billion euros, helped by higher interest rates.
The company reiterated an operating margin target of at least 7.5 per cent and free cash flow of 2.5 billion euros for 2024.