Renault, a French automotive company, has announced a 1.8% increase in its first-quarter revenue. The growth was mainly driven by the strong performance of its financing business, which helped to offset a decline in revenue from core automotive sales. During the period, Renault sold 549,099 units and generated revenue of 11.7 billion euros ($12.47 billion), surpassing expectations.
Despite the positive revenue growth, the global auto sector is facing challenges, including the slowdown in demand for electric vehicles. Competition from Chinese firms is intensifying, making it a tough year for many companies. Renault, known for models like Clio and Twingo, saw sales volume growth last year after four years of decline due to weak global demand putting pressure on prices.
Renault’s core automotive revenue fell in the quarter due to higher destocking by independent dealers compared to the previous year. However, revenue from financing activities experienced significant growth, increasing by 27.9% to 1.25 billion euros due to higher interest rates.
To achieve sustainable profitability, Renault has set an operating margin target of at least 7.5% for the year ahead amidst pressure from European auto firms like Tesla lowering prices in key markets leading to increased competition with European firms such as Renault.
In conclusion, Renault’s strong financial performance was driven by its financing business while its core automotive sales declined due to destocking by independent dealers compared to previous years despite this challenge Renault remains focused on achieving its financial targets for the year ahead with an operating margin target of at least 7.5%.