Renault saved by price hikes and Dacia

Yesterday, Renault published its financial results for last year. The French car manufacturer revived in 2022, compensating for serious sales regress and the costly Russian retreat with significant price hikes and a very profitable Dacia.

The turnover of Renault Group has progressed by 11,4% to € 46,4 billion, and the operating margin has doubled to € 2,6 billion, or 5,6% of turnover. ‘I’m still thinking of early 2021 when we lost € 8 billion the previous year,” said CEO Luca de Meo at the press conference in Renault’s headquarters in Boulogne-Billancourt yesterday. “There weren’t many people who saw us coming back then, but today I can declare that we’ve succeeded.

Price hike

Renault has restored its profitability margins by sellin more expensive cars, limiting rebates, and repositioning its portfolio toward higher positioning (with the Arkaina and the Megane Electric, for example). And this while total sales have almost been cut in half during the last 4 years.

Also, in 2022, Renault sold 5,9% fewer cars than in 2021, not counting the Russian withdrawal. Renault Group has sold just over 2 million vehicles, and more than a quarter of these were Dacias. To counter this, the factories have been restructured and don’t have an excess capacity anymore.

In 2022, Renault Group still registered a net loss of € 338 million due to the withdrawal from Russia and leaving its majority stake in Avtovaz after the Russian invasion of Ukraine (at a total cost of approximately € 2,3 billion).

“We are already on another planet,” de Meo continued. “We have halved our break-even point, generated € 2,1 billion of free cash flow, and reached a net financial result of € 549 million.”

The sales of hybrid and fully electric vehicles represented 39% of total sales in Europe in 2022, against 4,5% in 2019. de Meo wants to continue in that direction by launching 18 new models until 2025, including the fully electric R4, R5, Scnéic, and Kangoo. This year, de Meo also wants to refund the last billion of its state loan, granted in 2020 by the French government, to survive the pandemic on top of all other troubles.

Symbolic dividend

For the first time since 2019, Renault will propose a (symbolic) dividend of € 0,25 to its shareholders. Now it has to start the fight again to become a trusted value for the S&Ps of this financial world, says de Meo. “The fundamentals of the Group have been profoundly cured, and we will not go into reverse,” de Meo commented. The financial perspectives for 2023 and the return of a (small) dividend prove this.”

The order book for the Group in Europe is at a  record level for the moment, reaching 3,5 months on the 31st of December 2022. Renault reckons that the price of raw materials will stabilize itself but that logistics will remain complicated for a while. Nevertheless, an operating margin of 6% or slightly more is envisaged for 2023.

New partnerships

To be less vulnerable, Renault group has also revised its position in the Alliance with Nissan and Mitsubishi and has reached out to new partners. There are new partnerships with over 20 companies since 2020. The most important are the Chinese giant Geely and the Saudian Aramco stepping in  Horse, the part of Renault that will continue researching and producing internal combustion engines, primarily destined for hybrid powertrains.

On the other hand, Renault plans to go IPO with its electric division, Ampère. Meanwhile, low-cost daughter Dacia is doing very well, and Renault has succeeded in relaunching its sporty brand Alpine (+33% in sales in 2022), with several (electric) models to come and a resounding name in the world of sporty cars, emphasized by the Renault F1 team that has been rechristened Alpine Formula One.

Talking about Dacia, the Sandero has prolongated its title of European best-seller with individual buyers, held since 2017, by selling 229 500 units. The sales of the tiny pure electric crossover Dacia Spring have jumped by 75% to 48 900 units. Of the new Dacia Jogger, already 57 000 units were sold in 2022, and the company is preparing a hybrid version of the latter very soon.