Renault may go bankrupt

Renault may go bankrupt

October 16, 2019 0 By autotimesnews

Over the past 12 months, Renault has looked more like a soap opera than a car manufacturer. The French company last week fired CEO Thierry Bollor, who said he was the victim of a “coup”.

Thierry Bollor began work only in January after his predecessor, Carlos Ghosn, was arrested on charges of tax evasion and resigned. Since then, the Renault-Nissan alliance has been in turmoil, and cash flows and the stock price of the French company have declined.

Renault exacerbated dramatic events earlier, trying to team up with Fiat Chrysler Automobiles. These events created a deep drift sense in the manufacturer, which Bollor and its chairman, Jean-Dominic Senard, are probably equally to blame.

After Bolloor left, Renault had another opportunity to start all over again. Clotilde Delbos, CFO, was appointed interim CEO, while the company is looking for a permanent replacement. Like Nissan, who appointed a new CEO this week, Renault needs to focus on operational issues, rather than creating newspaper headlines. Automotive markets in all countries are declining, and pollution control and switching to electric cars are expensive.

Unfortunately, Renault has to start all over again. The automaker is quite well located in the electric car segment along with its Zoe and in emerging markets such as Brazil and Russia. Its budget sub-brand Dacia works well. However, Renault can no longer rely on Nissan’s large profits and dividends, because its Japanese partner is also struggling with falling sales.

Renault’s balance sheet is not the strongest: at the end of June, the group had only 1.5 billion euros of net cash, and its main automotive business earned a meager 4% operating sales margin in the first 6 months of 2019. Its local rival PSA Group has achieved twice as much. Overall, net profit is likely to fall by about a quarter this year, analysts say.

Looking to the future, by 2022 Renault’s annual revenue will be 70 billion euros, which is about one fifth more than last year. Nevertheless, with a decrease in demand for cars, such indicators are unlikely to be achieved. According to the forecasts of analysts surveyed by Bloomberg, sales in 2021 will grow only slightly – up to 59 billion euros.