Renault sees better sales performance in second half

Dow Jones Newswires (Paris) - French car maker Renault SA (RNO.FR) said Tuesday it expects to see a better performance in its global sales in the second half of this year, although the first half was disappointing in its key French market.

Renault was affected by supply-chain problems caused by the Japanese disasters in March that affected some key suppliers. It has estimated the cost of the disruptions in the first half at 150 million euros ($216 million).

Renault's freshly appointed chief operating officer Carlos Tavares told a group of journalists that the first-half sales results "will show the effects of the events in Japan." But the second half "will be better," he said, adding: "I don't see any big supply shocks."

"There will be tension, that's certain, but we won't be penalized by that as the world market is continuing to grow," Tavares said.

Renault's sales in France suffered in recent months when the company was unable to supply models with diesel engines. At the same time, it failed to anticipate a shift in the market, with car buyers preferring larger models than the small cars that had benefited most from scrapping incentives that were phased out at the end of last year. Renault's French market share dropped to 21.7% in June from 26.9% last year, while local rival Peugeot-Citroen's market share improved to 33.4% from 32.8%.

Renault and other manufacturers have been forced to entice buyers into showrooms by offering large discounts, and the fierce price competition is expected to continue in coming months, with the overall French market expected to fall by 8% over all of 2011 after a 1% increase in the first six months.

Tavares said his main task as he takes over what is the No. 2 position at Renault will be to free up the potential of Renault's employees and create a sense of "serenity" after a "difficult period." The morale of Renault's employees was hurt earlier this year when the company was deluded into firing some executives that it thought had been passing on company secrets about it electric-vehicle program.