Weak january in china, renault hopes for europe

The world’s largest car market in china grew more weakly than expected in january. Sales of passenger cars rose by only seven percent year-on-year to 1.8 million units, the industry association caam reported in beijing on thursday. Analysts had expected a more rough plus. Like most european manufacturers, renault is counting on strong growth in china, where it believes it still has a lot of catching up to do, but at the same time sees a gradual recovery in europe.

The overall chinese vehicle market grew by 13.9 percent last year to almost 22 million units. However, stringent anti-pollution regulations and a central government campaign for greater fuel efficiency are putting prere on china’s auto business.

Renault is no longer just looking to the east with hope: the gradual recovery in europe is giving the carmaker, which has been particularly hard hit by the reluctance to buy in the european crisis countries, a more optimistic outlook for the future. Renault also suffered a significant drop in profits due to the loss of business with iran as a result of sanctions and high costs for the group’s restructuring last year. In 2013, the group’s profit of 586 million euros was around three times lower than in 2012. Sales stagnated at around 41 billion euros, the company reported.

However, the french are already expecting higher sales and operating profits this year. Further growth is targeted up to the year 2017. Then sales are expected to climb from just under 41 billion euros in 2013 to 50 billion. Operating profit is expected to amount to at least five percent of sales – i.E. 2.5 billion euros.

Last year renault achieved just under half that figure. Compared to 2012, this was already a powerful improvement, exceeding market expectations. The stable dividend of 1.72 euros was also surprisingly high. In addition to europe, renault is hoping for potential growth regions such as brazil and russia – now the carmaker’s second- and third-largest individual markets. But the situation there is currently mixed: while europe is stabilizing, growth in the emerging markets is less certain.

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