Behind the good margins of Renault and Stallantis are doubts about sales of electric vehicles

Of the two French carmakers, Renault was the first to publish its results for Wednesday, February 14, 2023: an operating margin of over 7%, unheard of! Despite an accounting loss of 880 million euros on the sale of 5% of Nissan’s capital, the group’s net profit reached 2.2 billion euros. Last year, it sold 2.2 million cars and its order book was full at the end of February. Luca Di Meo more than succeeded in turning the group around.

Yet the very next day, Carlos Tavares stole the show: three years after PSA’s merger with Fiat-Chrysler, he lifted Stallantis into the top three in the CAC 40 between Total and LVMH with a net result of 18.6 billion. Euro (+ 11%). The carmaker had delivered 6.2 million cars in 2023. Its operating margin is 12.8%, the highest in the sector, which makes up the group. “One of the most resilient in the event of a price war”, Mr. Tavares warned, and one “A better place to seize opportunities” In the event of consolidation in the field.

The two bosses are actually preparing for the arrival of competition from Chinese manufacturers on the electric market, at a time when consumers are hesitant and stop buying as soon as governments withdraw their subsidies. Additionally, Renault and Stellantis are unable to compete with Tesla’s “software car” technology. Believing that consolidation is not necessary, Luca di Meo assures that its small size will allow it to be more agile in this moment of technological disruption, but undoubtedly recognizes that it is counting on the connection with its partners. Chinese, Envision on batteries and Geely (Volvo’s shareholder) on electric motors.

Cost reduction

Both manufacturers are also making every effort to reduce their costs so that the “wattage” does not cost more than a thermal or hybrid car. Because for the moment, if their results are so good, it is mainly thanks to their margins on these models. At Renault, Austral and Espace, two hybrid models assembled in Spain, are the most profitable vehicles in the group’s history, according to financial director Thierry Peyton. Dacia also maintains generous margins. Even if the slow pace of the transition to electric does not weigh on the operational performance of Renault or Stellantis, the diamond brand admitted that it spent 500 million euros in investment depreciation to account for the less-than-expected start from the electric Megane.

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