Renault head maintains 2008 targets despite difficulties

Business Materials 29 April 2008 23:56

The head of French automaker Renault, Carlos Ghosn, said Tuesday the group was maintaining its 2008 growth targets but warned the next few months would be difficult in an "unfavorable environment."

"We're sticking to our objectives of a 4.5 percent operating margin for 2008... and we are maintaining our volume growth projection of more than 10 percent," Ghosn told a Renault shareholder general assembly.

"The first months of the year have not been easy. Everything suggests that the next few months will not be either, given an economic and financial environment that is both unfavorable and volatile."

He said Renault was at a disadvantage because of the rise of the euro, which makes its products more expensive and less competitive on world markets, the AFP reported.

In addition, "the hike in raw materials prices has been stronger than foreseen" at a time when "the European market is contracting," notably in Spain and Italy.

Renault is banking on developing its vehicle range with nine new products this year as well as on a good performance in emerging market countries such as Russia, Brazil and India, which are enjoying double digit growth.

"The growth of the automobile market will come via emerging countries," Ghosn said, adding that the Renault would nonetheless continue to be active on "mature markets," even in a "defensive" capacity.

Ghosn recalled that Renault is engaged in a project to offer a car for 2,500 dollars in India, in partnership with the Indian manufacturer Bajaj, with the first vehicle expected to be ready for sale in first half of 2011.

Renault is also building a plant at another Indian location, Chennai, and in the Moroccan city of Tangiers.

The group has in addition teamed up with Russian automaker Avtovaz, as Russia is seen as soon becoming Europe's leading auto market. It is also preparing a project to produce electrical vehicles, with 2012 as the target sales date.