Renault Is Stuck in the Slow Lane Even as Car Sales Surge

After one of its toughest years ever, the global auto industry is roaring back as lockdown-weary and public-transport-leery consumers swarm showrooms. The biggest carmakers have reported double-digit jumps in first-quarter revenue even as they battle a semiconductor shortage that’s forced production cutbacks. And booming sales mean they can move the metal without discounts, spurring several to raise their profit forecasts for the year. The outlier in all this: France’s Renault SA, which saw revenue fall 1% in the quarter after losing almost $10 billion last year.

The 123-year-old automaker is suffering from high costs, limited geographic reach, and continuing fallout from the 2018 arrest in Japan of Carlos Ghosn, the former boss who’s now a fugitive living in Lebanon. Renault missed out on the shift to SUVs, clinging instead to sedans and hatchbacks, which offer far thinner profit margins and face intense competition in the crowded European market. And the pandemic laid bare weaknesses stemming from its underutilized factories, labor strife, and meddling by its most powerful shareholder, the French government. “Management has identified the problems,” says Charles Coldicott, an analyst at stock research house Redburn. “But it will be very challenging for Renault to properly turn around.”