Renault doubles estimate for lost production as chip crisis deepens

Renault has warned that its production will be hit far harder by the industry’s chip shortage than the French carmaker feared just two months ago.

The company on Friday said it would produce almost 500,000 fewer vehicles this year, a significantly bigger dent in the group’s output than the 220,000 lost vehicles it predicted at the start of September.

The gloomier forecast came as Renault reported a sharp decline in third-quarter sales. Revenues for the quarter were €9bn, or 13 per cent lower than the same period a year ago, far shy of the €11.3bn generated in the same quarter in 2019 before the pandemic struck.

Carmakers from Volkswagen to Toyota have been forced to cut production because of semiconductor shortages, costing the industry millions of lost vehicles and comes at a time when auto groups were expecting a major recovery from the pandemic.

Renault’s chief financial officer Clotilde Delbos said a lockdown in Malaysia “added a layer of disruption to the supply chain and led to a more severe chip shortage than the one we were expecting”.

The carmaker hoped the crisis would ease by the end of 2021, Delbos added, though shortages would remain a major problem for most of next year until new investments by manufacturers began to bear fruit.

Production forecasts from suppliers sometimes changed on a daily or even hourly basis, Delbos said, hampering carmakers’ ability to plan at factory level.

As well as the drag from the lack of chips, which carmakers face fierce competition for from consumer electronics groups, Renault’s third-quarter sales also suffered a tough comparison to 2020, when they were boosted by pent up demand.

Despite the drop in sales, Renault, which does not disclose profitability in the first and third quarters, said it expected margins in the second half to match the 2.8 per cent reported for the first six months of the year.

Delbos said the forecast came “despite the deterioration in components availability in the third quarter and reduced visibility for the fourth quarter”. The group expects to hit its €2bn cost savings target, originally set for 2023, by the end of this year.

Although disruptive to production, the chip shortage has helped carmakers improve pricing by stripping away the need for discounting previously as rival manufacturers chased higher sales numbers.

Renault said its current order bank is at 2.8 months of sales, the highest level in 15 years.

The Dacia Sandero model had a six-month waiting time, while there was also a “big wait” for the new Renault Arkana sport utility vehicle and the company’s vans, Delbos said.

The group is prioritising chips for its latest and most profitable vehicles, as well as setting aside some needed for the test version of models that it is planning to release next year, including the electric version of the Megane.

A third of Renault’s sales in the third quarter contained electric or hybrid technology, while about two-thirds of the Arkana sales were hybrid models.

Source link

Related Articles

Back to top button