A large-scale decline in car sales has certainly affected the world's leading carmakers. The French auto group Renault has significantly lowered its revenue outlook for the remaining year. The gloomy economic forecast provided by Renault led to a noticeable fall in the shares prices of several European automobile companies. According to Renault, the weakening European economy is weighing on car sales, and the need to invest in environmentally friendly technologies has increased the cost of production. The company’s shares dropped by 15% then slightly gained ground again. Renault’s interim CEO, Clotilde Delbo, announced that the company’s revenue will be 1 billion euros less than previously forecasted. Operating profit is expected to decline by 600 million euros. The sales volume is forecasted to fall by about 4% compared with the previous report. According to revised data, the cash flow is likely to reduce by € 700 million. Analysts warn that this could lower the company’s credit rating. Renault shares plunged amid the negative news losing all its gains reached in 2019. The CAC40 (FRA40) Index declined dragging down the shares of such companies as Fiat Chrysler, Peugeot, and Volkswagen. Experts believe that an overall slowdown in the European economy as well as the introduction of stricter emission regulations, have both negatively affected car sales volume. With the pressure coming from the emission regulations the carmaker had to invest heavily in environmentally-friendly engine production. The management of the company was reluctant to switch to diesel technology and plan to discontinue diesel cars in the future. The tensions between Renault and Nissan also could have contributed to the worsening revenue forecast. Previously, the two companies worked in cooperation. However, some inner disagreements within the companies have deteriorated the situation. The upcoming Brexit may as well influence the auto group business situation. The carmaker, similar to some other companies in the industry, does not supports Britain's exit from the EU. Renault’s officials believe that the UK’s actions bring harm to the European economy. Experts warn that in order to restore its previous gains the company will need to make big efforts that seem impossible at the moment.
