October 1, 2008 / 12:21 PM / 10 years ago

Renault pushes electric vehicle sales

PARIS (Reuters) - Renault expects to sell between 20,000 and 40,000 electric vehicles in 2011, and break through the 100,000 unit threshold the following year, said Patrick Pelata, executive vice president of the fourth largest European carmaker by sales volume.

Patrick Pelata, executive vice president of Renault, poses before the Reuters Auto summit in Paris October 1, 2008. REUTERS/Jacky Naegelen

Renault, which recently confirmed a total of 6,000 job cuts to help it maintain profitability, is looking at a site in France to produce the electric vehicle with Flins, near Paris, as a likelihood.

The group is also considering manufacturing its lithium-ion battery, being developed by Renault-Nissan alliance partner Nissan Motor Co. Ltd in a joint venture with NEC Corporation on France, as it would make sense to locate production close to the engineering center Pelata said at the Reuters Auto Summit in Paris.

Pelata said the group’s first electric vehicle will be adapted from a new sedan model called the Fluence which will be launched next year with a conventional engine.

Renault is set to launch a new version of its best-selling Megane at the Paris auto show, which opens to the public on Saturday, amid slowing car sales in Europe.

Pelata said he hoped the Laguna Coupe, launched earlier this year, would help promote the rest of the Laguna family, sales of which have been “a little disappointing.”

“We think the Laguna Coupe has everything the Laguna has but (also) is a sexy car.” The Laguna saloon has delivered on quality and performance commitments but sales were below expectations because of a general sector decline and because the car was ‘very serious’ and lacked some ‘sex appeal’.

Pelata said the group will continue with its revised product offensive - it was due to launch 26 new products by 2009, but has postponed a new version of the Espace - despite the worsening economic climate.

“Obviously we’re going now to look at market share instead of total volumes,” Pelata said, adding the group would comment on its targets with third quarter results later this month.

Pelata said Renault had seen an impact from the credit crisis in particular in countries where the majority of mortgages have variable interest rates.

“Spain and the UK are particularly sensitive,” he said, adding that “higher interest rates are reducing purchasing power for buyers.”

A crisis is a moment when “you have to not deny that you have a problem,” said Pelata. “We are working hard on the plan we have already announced.”

Pelata estimated that, depending on country, between 20 and 40 percent of sales to customers were financed by its own financing division RCI Banque. He said the company has seen instances of customers being unable to make their payments in Spain - where car sales plummeted over 40 percent in August.

“For the moment it’s under control but it’s (happening) more than 6 months ago,” he said.

French new car sales rose 8.4 percent in September compared with the same month last year, thanks to consumer tax breaks on clean cars, following a 7 percent year-on-year fall in August.

Patrick Pelata, executive vice president of Renault, addresses the Reuters Auto summit in Paris October 1, 2008. REUTERS/Jacky Naegelen

Adjusted for the number of working days, sales were down 1.4 percent in September.

However, across Europe, demand for new cars fell sharply in July and August, darkening the outlook for carmakers banking on higher sales to meet profitability targets despite spikes in raw material costs.

Data from European industry body ACEA showed new car registrations fell by 7.3 percent in July and 15.6 percent in August compared with a year ago because of a general deterioration in consumer confidence and the effect of continuing high fuel prices.

Reporting by Chang-Ran Kim, Matthias Blamont and Helen Massy-Beresford; Editing by David Cowell and Hans Peters

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