PARIS -- Renault expects its sales growth to accelerate this year as it launches a number of new models.
Renault posted a 1.8 percent rise in first-quarter revenue to €11.7 billion ($12.5 billion) on Tuesday, with high interest rates lifting sales at its financing arm. Its global vehicle sales rose 2.6 percent to 549,099 in the quarter versus a year earlier.
Renault is in the middle of a turnaround plan while also accelerating a shift to electric models and is launching seven new models this year, including the €25,000 ($26,632) all-electric Renault 5.
The global auto sector is bracing for a tough year amid slowing demand growth for electric vehicles, adding another challenge to companies already battling fierce competition from China.
A lack of affordable options has been a major stumbling block for broader mass adoption of EVs.
Renault is on track to lower its EV costs by 40 percent by 2027, Chief Financial Officer Thierry Pieton said on Tuesday.
Orders for the updated Dacia Spring EV, which costs under €20,000 ($21,286), will start in the second half of this year, Pieton told analysts.
No EV price cuts
Leading EV maker Tesla is cutting prices in several markets, piling more pressure on European automakers. Tesla cut the price of its Model 3 to $39,990 in Renault's home market, matching the starting price of the new electric Renault Scenic, which has a lower range.
Pieton said Renault would pass on cost reductions to customers through lower costs for new models rather than slashing prices.
He said Renault is benefiting from robust prices and cost discipline with demand for models such as the electric Megane E-Tech countering slower EV sales.
"We are sticking to a policy of stable prices," Pieton said on a media call on Tuesday. "We have managed to lower costs by quite a bit — our new models come at a higher margin for us and at a lower price for our customers."
Bernstein analysts wrote in a client note that "investors will be encouraged" by Renault's pricing strategy and by the fact the automaker's "overall messaging remains positive."
Renault reiterated its 2024 forecast for an operating margin target of at least 7.5 percent and free cash flow of €2.5 billion.
Pieton said Renault is confident that it can meet fresh European Union CO2 reduction targets heading into 2025. thanks to rising EV and hybrid sales.
During March, sales of full-electric cars in Europe slumped 11 percent with higher interest rates, weaker economic growth and the phasing out of generous subsidies contributing to the downturn.
The tough environment prompted CEO Luca de Meo earlier this year to abandon plans for the initial public offering of Renault’s software and EV arm Ampere due to headwinds that included Tesla’s frequent price cuts and increased competition from Chinese manufacturers.
"The EV market is a bit slower than what had been anticipated two years ago but it's still growing," Pieton said on Tuesday.
VW talks
Renault, which loosened ties with long-time Japanese partner Nissan last year, has been holding talks with rivals including Volkswagen about sharing the cost of developing a platform for more affordable EVs.
Pieton said there "was no particular news" on the Volkswagen talks "but we remain open to a partnership" for the platform.
Bloomberg contributed to this report
