Renault records record £6.5 billion loss in first half of 2020

Renault

Financial impact of Covid-19 and struggling Alliance partner Nissan hits French giant

Group Renault posted a loss of €7.3 billion (£6.5 billion) in the first half of 2020, with sales falling by 34.9 per cent as the impact of the Covid-19 pandemic hampered the French giant’s ongoing recovery plans.

The group, which includes Renault, Dacia, Alpine and the Russian-based Avtovaz, sold 1.26 million cars between January and June, compared to 1.9 million in the same period last year. That resulted in the firm posting revenues of €18.4 billion (£16.4 billion), a 34.3% year-on-year decline. 

Renault estimated the impact of the Covid-19 pandemic on its profits so far to be around €1.8 billion (£1.6 billion) It also said that its was hit by a €4.817 billion (£4.3 billion) negative contribution from Renault-Nissan-Mitsubishi Alliance partner Nissan, in which the French firm has a substantial shareholding. Nissan also posted record first half losses this week.

Renault’s new chief executive Luca de Meo, who recently joined the firm from Seat, said: “Although the situation is unprecedented, it is not final. Together with all of the Group's management teams and employees, we are fully dedicated to correcting the situation through a strict discipline that will go beyond reducing our fixed costs.

“Preparing for the future also means building our development strategy, and we are actively working on this. I have every confidence in the Group's ability to recover.”

In a conference call, de Meo said that he would present his turnaround plan for Renault in early 2021, hinting that “a lot” would happen in the second half of 2020.

Speaking about the relationship with Nissan, which has been under strain since the ousting of former boss Carlos Ghosn, de Meo said: "With these results, the first priority is for both companies to focus and fix their miseries internally."

The two firms have adopted a new 'leader-follower' model, with greater technology and product sharing, and each focusing on core strengths and markets. De Meo added: "I think we are finding a good set-up and trying to focus on four or five key projects where we can really prove that by working together it’s going to bring a benefit. I am confident we can give a lot to one another.”

There were some positive points for Group Renault, with the firm noticing that it had a high levels of orders in June as European lockdown measures were lifted. It also noted that sales of the electric Zoe hatch were up nearly 50% year-on-year, and said the Group was on track to meet its CAFE targets for 2020.

Renault has already begun a major cost-cutting programme, and it said that it is on course to reach the goal of saving €600 million (£534 million) this year.

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