Renault SA Chief Executive Officer Carlos Ghosn needs a new blockbuster to pull Europe's worst-performing auto stock out of a nosedive and defend his reputation. He may not get it when he introduces the revamped Megane compact at the Paris Motor Show this week.
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A woman walks by a Renault showroom in Paris.
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Ghosn unveils the car as key models lose ground to Volkswagens, Peugeots and Fiats. To keep sales growing, the Boulogne Billancourt, France-based company has relied on the low- cost Logan sedan in emerging economies, where sales are beginning to slow as the global financial crisis take hold.
"The tide's turning against them now," said Stuart Pearson, an analyst at Credit Suisse in London who switched his rating on Renault to "underperform" from "outperform". "The international markets that were Renault's strength are becoming its Achilles heel, and the new Megane isn't going to be enough to meet next year's targets."
Renault's share of the western European market dropped to 7.7 percent in the first eight months of this year, from 9.7 percent in 2005 - when Ghosn took over - even as it outspent rivals on model development. Two years ago, Ghosn vowed to post a 6 percent operating margin by 2009 or "take the consequences."
In July, Renault said the company would meet its 4.5 percent full-year margin target only after a 165 million-euro ($239 million) payment from OAO AvtoVAZ, the Russian automaker in which it owns a 25 percent stake, for licenses to build two versions of the no-frills Logan.
Goldman, Sachs & Co advised clients to sell Renault shares last month, as it maintained a "buy" on larger French carmaker PSA Peugeot Citroen. Lead analyst Stefan Burgstaller cited concern that Renault's 2009 targets also will be "unachievable without 'help' from AvtoVAZ."
(Agencies/Xinhua News Agency october 1, 2008)
