French car maker Renault SA on Thursday announced a big loss for 2009 and warned that business conditions will remain difficult this year because of an expected 10% decline in the European market.
Renault's net loss of €3.07 billion ($4.22 billion) was its first annual loss since 1996 and came after a net profit of €599 million in 2008.
Half of the 2009 loss came from Renault's stakes in other vehicle makers; it owns 44% of Japan's Nissan Motor Co., 21% of Swedish truck maker Volvo AB and 25% of Russia's AvtoVAZ. The loss also resulted from the effect of the economic downturn on Renault's sales.
Renault wants to improve cash flow by continuing to cut fixed costs, including investments, and extracting €1 billion in savings from its alliance with Nissan. It also wants to increase its sales, but Chief Executive Carlos Ghosn acknowledged waning vehicle sales in Europe would likely mean a continuation of the auto makers' price war.
But Renault is also under pressure to maintain production and worker numbers in France. Mr. Ghosn was summoned by President Nicolas Sarkozy last month after a report that Renault wanted to produce the next-generation model of its popular Clio in Turkey only.
He assured the president that Renault would produce this model in France, too. Mr. Ghosn said the episode had revealed the need for Renault to be more pro-active in explaining its industrial plans so as to avoid "misunderstandings."
Mr. Ghosn said Thursday Renault is preparing a new medium-term strategy but that it wouldn't be unveiled until 2011. By that time, the company hopes to have a better idea where it and the industry are headed.
One market Renault hopes to enter is China. Nissan—of which Mr. Ghosn is also CEO—is preparing the ground there, with networks of dealers and suppliers, for an eventual Renault move, said Mr. Ghosn.
