Renault posts lower margins in 2026 as price pressure hits profit

[PARIS] Renault Group posted a 15 per cent drop in 2025 operating profit on Thursday (Feb 19) and guided for lower margins in 2026.

This comes as price pressures from rising Chinese competition and traditional peers in its core European market erode earnings.

The French automaker had warned of weakening margins in July after market conditions deteriorated in the second quarter, particularly in the European van market where the Renault brand is the leader.

It has been led by new chief executive officer Francois Provost since the summer.

It reported an operating profit of 3.6 billion euros (S$5.4 billion), in line with the consensus forecast of analysts compiled by the company, and an operating margin of 6.3 per cent.

It said that it was targeting a group operating margin of around 5.5 per cent in 2026, and between 5 and 7 per cent in the medium term.

When faced with price pressure from Chinese brands arriving in Europe and larger rival Stellantis’ aggressive sales strategy to regain market share, Renault is also seeing its margins eroded by its expansion in overseas markets.

This is where profitability is lower, as it looks to achieve economies of scale and reduce its dependence on Europe.

It is banking on its Duster sport utility vehicle to help grow its Indian business, while also expanding in South America.

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Its overseas markets helped Renault lift sales volumes by 3.2 per cent in 2025 to 2.3 million vehicles, and bring revenues to 57.9 billion euros, up 3 per cent from the year before.

The company will meanwhile continue to target lowering variable costs by around 400 euros a vehicle, chief financial officer Duncan Minto told journalists, after achieving the target in 2025.

The group reported a full-year net loss on a group share basis of 10.9 billion euros, its first loss in five years, largely due to a one-off write-down of 9.3 billion euros in July on its stake in struggling partner Nissan.

Renault said that it would pay a dividend of 2.20 euros a share, unchanged from what it paid in 2024.

The company’s shares fell 25 per cent in 2025, and are down about 8 per cent in the year to date, less than Stellantis, which is down 30 per cent so far this year. REUTERS