Renault saves furniture in first quarter thanks to ‘price power’

Half a fig half a grape in the first quarter for Renault. The French auto group shows a volume decline of almost 17% with 552,000 sales compared to 665,000 a year ago. The decline in the European market (-12%) had a major impact on turnover. The cessation of activities in Russia, first due to lack of supplies, before the group decided to organize its final withdrawal, also caused a drop in sales. As a reminder, Russia is the second largest French market in the world.

Less sales, but more expensive sales

But despite this sharp drop in volume, turnover fell by only 2.7% to 9.7 billion euros. This performance is essentially the result of so-called “pricing power” strategies, or the ability to defend prices. Luca de Meo has thus implemented an arsenal of sales methods to drive up unit sales prices: ending unprofitable sales, simplifying the diversity of options, scaling up new products. It is on the latter that Renault achieves its best performance. Launched in 2021, the success of the Arkana continues at a rate of 9,000 sales per month, 60% of which are sold with E-Tech, Renault-style hybridization. Overall, Renault has significantly increased the share of sales equipped with the E-Tech system across the range as it now represents 36% of sales (+13 points).

Major breakthrough in 100% electric

The new 100% electric Mégane also had a great launch with 10,000 orders in two months, a good performance in this segment. In fact, 70% of sales were made on the superior finishes, in other words the most expensive and most profitable. Note the excellent performance of the Dacia Spring, which sold more than 20,000 units in Europe in the first quarter and even climbed to number two in electric cars in France.

Will E-Tech hybridization save Renault?

Overall, the price effect over the quarter was almost 6 points. However, commercial performance was hampered by the semiconductor crisis. Renault has just announced the cessation of production of Mégane E-tech, due to lack of chips. In addition, for the remainder of the fiscal year, the group will record the full effect of the withdrawal from the Russian market, which represents no less than 500,000 cars per year.

New models to compensate for the Russian withdrawal

The French group nevertheless believes that it can count on a series of new models to absorb the loss of volumes, but also to strengthen its pricing strategy. For example, Dacia has just launched the Jogger, a model whose price list is at the top of the range (36 orders already in four months, of which 70% for higher finishes). Above all, Renault is investing in Austral to boost its sales of compact SUVs, a vibrant and highly profitable segment. Finally, Alpine, the group’s premium sports brand, appears to be finally taking off with 709 sales for the quarter, up 67%.