European OEMs’ performance and 2016 targets

BMW/Daimler aim for record unit sales; VW seeks to stay on par with prior-year

2016/06/10

Summary

Six European OEMs' unit sales

Six European OEMs' operating profits

 This report outlines six major European OEMs’ 2015 business results, 2016 targets, and midterm strategies.

 The combined 2015 unit sales of the six OEMs (VW Group, BMW Group, Daimler, PSA, Renault, and FCA) amounted to 25.42 million units, up 1.5% year-over-year (y/y). The luxury car makers BMW and Daimler achieved new sales records again and Renault reported a growth of 3.3% in its unit sales. While the sales of PSA and FCA increased slightly, VW, which has been rocked by the fallout from its emissions test misconduct, saw a 2.0% decline. By region, all OEMs reported increased sales in Europe that accompanied an economic upturn. The three German OEMs and FCA also saw boosted sales in North America. In China, where the economy has been slowing, sales grew at a sluggish pace, while sales in Russia and Brazil decreased substantially. Among premium brands, BMW maintained its position as a segment leader while Daimler overtook Audi and almost shared the top position because of a significant increase in sales in China.

 For financial results, VW’s consolidated sales revenue rose by 5.4% y/y to EUR 213.3 billion while its operating losses were EUR 4.1 billion, which includes the EUR 16.2 billion added to deal with its emissions testing misconduct.

 BMW marked record highs with sales revenue of EUR 92.18 billion, up 14.6% y/y, and EBIT of EUR 9.59 billion, up 5.2% y/y. Daimler also reported record revenue and EBIT, with respective increases of 15.1% to EUR 149.5 billion and 22.6% to EUR 13.2 billion.

 PSA’s revenue grew by 6.0% to EUR 54.7 billion. Its operating profit significantly increased from EUR 800 million in 2014 to EUR 2.73 billion with reduced fixed costs. Accordingly, PSA reported a net profit for the year after a net loss the year before. Renault’s revenue also rose by 10.4% to EUR 45.3 billion while its operating profit increased by 44.2% to EUR 2.32 billion through cost cutting. Although FCA’s revenue climbed by 18.1% to EUR 110.6 billion, its EBIT fell by 7.4% to EUR 2.63 billion. Its profits were reduced by the impact of unusual expenses, including those for realignment of its production capacity in North America.

 According to European OEMs’ forecasts for 2016, automotive markets in Europe and North America are expected to grow slightly, and China is expected to maintain an upward trend. At the same time, the Brazilian and Russian markets are projected to shrink. Within this context, the OEMs set their 2016 targets as follows:



2016 targets of Six European OEMs

VW Group VW Group forecasts that the Group’s unit sales in 2016 will be at the same level as the previous year but sales revenue may be down by 5% y/y due to stagnant economies in South America and Russia, negative exchange rates, and the fallout from its emissions testing misconduct. In terms of its operating profit, the Group anticipates an operating return on sales of between 5.0 and 6.0%.
BMW Group BMW Group is aiming to achieve another record for sales volume. The Group’s sales revenue and EBIT are expected to increase slightly. The company’s automotive divisions are expected to have an EBIT margin of between 8.0 and 10.0%.
Daimler Daimler Group expects to achieve further growth in the Group’s unit sales and revenue in 2016. Significant growth is anticipated for the company’s passenger car and van divisions, as well as Asia and Western Europe. However, the rate of growth is likely to be lower than in 2015.
PSA PSA aims to reach an average 4% operating margin for the automotive divisions between 2016 and 2018.
Renault Renault is aiming to increase the Group’s revenue, improve its operating margin, and continue to generate a positive free cash flow for its automotive divisions.
FCA FCA is aiming for Group revenues of EUR 110.0 billion (EUR 110.6 billion in 2015), adjusted EBIT of EUR 5 billion (EUR 4.8 billion), and adjusted net profit of EUR 1.9 billion (EUR 1.7 billion).

Six European OEMs’ business results

(in millions of EUR/in thousands of units for global unit sales)

  2009 2010 2011 2012 2013 2014 2015
VW Global unit sales 6,336 7,203 8,265 9,276 9,731 10,137 9,931
Revenue 105,187 126,875 159,337 192,676 197,007 202,458 213,292
Operating profit 1,855 7,141 11,271 11,498 11,671 12,697 (4,069)
Net profit 911 7,226 15,799 21,884 9,145 11,068 (1,361)
BMW Global unit sales 1,286 1,461 1,669 1,845 1,964 2,118 2,247
Revenue 50,681 60,477 68,821 76,848 76,059 80,401 92,175
Operating profit 289 5,111 8,018 8,275 7,978 9,118 9,593
Net profit 210 3,224 4,907 5,111 5,329 5,817 6,396
Daimler Global unit sales 1,551 1,895 2,111 2,198 2,354 2,546 2,853
Revenue 78,924 97,761 106,540 114,297 117,982 129,872 149,467
Operating profit (1,513) 7,274 8,755 8,820 10,815 10,752 13,186
Net profit (2,644) 4,674 6,029 6,830 8,720 7,290 8,711
PSA Global unit sales 3,188 3,602 3,549 2,965 2,818 2,938 2,973
Revenue 48,417 56,061 59,912 55,446 53,079 51,592 54,676
Operating profit (689) 1,796 1,315 (560) (364) 797 2,733
Net profit (1,161) 1,134 588 (5,008) (2,327) (706) 899
Renault Global unit sales 2,309 2,627 2,723 2,549 2,628 2,712 2,802
Revenue 33,712 38,971 42,628 40,720 40,932 41,055 45,327
Operating profit (396) 1,099 1,091 782 1,242 1,609 2,320
Net profit (3,068) 3,490 2,139 1,712 695 1,998 2,960
FCA Global unit sales 2,152 2,082 3,979 4,223 4,352 4,600 4,610
Revenue - - 59,559 83,957 86,624 93,640 110,595
Operating profit - - 3,467 3,541 3,002 2,834 2,625
Net profit - - 1,651 896 1,951 632 377
Total Global unit sales 16,822 18,871 22,296 23,056 23,846 25,051 25,416
Revenue - - 496,797 563,944 571,683 599,018 665,532
Operating profit - - 33,917 32,356 34,344 37,807 26,388
Net profit - - 31,113 31,425 23,513 25,826 17,698
Source: Press releases and financial statements of the respective OEMs.
(Note) Figures in brackets “( )” represent negative values.


VW Group posts 2015 operating loss of EUR 16.2 billion due to emissions scandal

VW Group's unit sales by region

 The VW Group’s global unit sales in 2015 declined to 9.93 million units for a decrease of 2.0% y/y. Amid challenging conditions resulting from the Group’s emissions scandal, sales in Western Europe and North America increased slightly while deliveries in Central/Eastern Europe and South America fell chiefly because of economic slumps in Russia and Brazil. Sales in China, VW Group’s largest single market, decreased to 3.55 million units, down by 3.4% y/y.

 By brand, sales of the VW passenger cars fell to 5.82 million units, down by 4.8% y/y, while those of other passenger vehicle brands (Audi, Skoda, SEAT and Porsche) surpassed the previous year’s level. At the same time, sales by the commercial vehicle division, which is made up of VW brand commercial vehicles, Scania and MAN, fell 5.7% y/y to 610,000 units due to a stagnant economy in South America.

 The VW Group’s 2015 consolidated sales revenue rose by 5.4% y/y to EUR 213.3 billion. However, the Group posted an operating loss of EUR 4.1 billion and a loss after taxes of EUR 1.4 billion due to negative special items including EUR 16.2 billion for dealing with the emissions scandal. Excluding special items, operating profit amounted to EUR 12.8 billion, which was slightly higher than the figure for the previous year. On April 21, 2016, VW agreed in principle with the U.S. authorities to offer customers affected by the emissions scandal car buybacks and repairs.

 The VW Group forecasts that its unit sales in 2016 will be on the same level with the previous year, but sales revenue may decline 5% y/y due to stagnant economies in South America and Russia, negative exchange rates, and the emissions scandal. In terms of its operating profit, the Group anticipates an operating return on sales of between 5.0 and 6.0%.

VW Group’s global unit sales by brand and region

(1,000 units)

  2011 2012 2013 2014 2015 January-March
2015 2016
VW brand 5,091 5,738 6,022 6,119 5,823 1,479 1,460
Audi brand 1,304 1,457 1,575 1,741 1,803 438 456
Skoda brand 879 939 921 1,037 1,056 265 277
SEAT brand 350 321 355 391 400 103 103
Other brands 8 70 174 203 239 54 59
VW commercial vehicle 529 550 462 447 431 109 113
Scania 80 67 80 80 77 18 18
MAN 25 134 140 120 103 22 23
Global sales 8,265 9,276 9,731 10,137 9,931 2,488 2,508
Western Europe 3,168 3,092 3,084 3,274 3,430 871 901
Central/Eastern Europe 563 672 668 671 615 148 151
North America 668 843 891 893 932 206 202
South America 963 1,082 992 795 558 153 111
Asia/Pacific 316 365 376 382 386 104 90
China 2,260 2,815 3,271 3,675 3,549 898 956
Other regions 327 407 449 447 460 109 99
Source: VW Annual Reports, press releases issued on January 8/April 15, 2016
(Note)
1. “Other brands” includes Bentley, Lamborghini, Bugatti, and Porsche (Porsche has been included since August 2012). MAN was included in the table above since November 9, 2011.
2. VW changed the classification of the Saveiro, which has been on sale in South America, from a commercial vehicle to a passenger car in 2014. The table above reflects this change from 2013.

VW Group’s consolidated business results

(in millions of EUR)

  2009 2010 2011 2012 2013 2014 2015
Sales revenue 105,187 126,875 159,337 192,676 197,007 202,458 213,292
Operating profit 1,855 7,141 11,271 11,498 11,671 12,697 (4,069)
Profit before tax 1,261 8,994 18,926 25,487 12,428 14,794 (1,301)
Profit after tax 911 7,226 15,799 21,884 9,145 11,068 (1,361)
Source: VW Annual Reports, April 22, 2016 press release
(Note) The operating profit, profit before tax and profit after tax in 2015 include negative special items comprising a EUR 16.2 billion charge resulting from the emissions scandal.

VW Group’s 2016 targets

  • The VW Group expects that its global unit sales will be at the same level as the previous year. While market conditions will remain persistently challenging, further growth in volume is anticipated in China.
  • The Group’s sales revenue is expected to decline 5% y/y due to stagnant economies in South America and Russia, unfavorable exchange rates, and the emissions scandal. In terms of operating profit, the Group anticipates an operating return on sales of between 5.0 and 6.0%.
  • The Group expects a sharp decrease in sales revenue for the passenger cars division, with an operating return on sales of 5.5-6.5%.
  • With sales revenue for the commercial vehicle division likely to remain unchanged, the operating return on sales should be between 2.0 and 4.0%.


BMW Group targets a new high for unit sales in 2016

BMW Group's unit sales by region

 The BMW Group revealed “Strategy NUMBER ONE > Next,” its new midterm strategy for the period until 2020, on March 16, 2016. The Group plans to expand the scope of digital connectivity between people, vehicles, and services, and to broaden its technological expertise in the fields of electric mobility and automated driving. 

 BMW Group achieved its sixth consecutive record-breaking year in 2015, posting a new high for unit sales with 2.25 million units, up 6.1% y/y. The sales volume of BMW brand vehicles increased by 5.2% y/y to 1.91 million units with a strong performance from the 2 Series, 4 Series, and X family. In the year 2015, MINI sold 338,000 units, up 12.0% y/y, while Rolls-Royce delivered only 3,785 units, down 6.8% y/y.

 By region, sales volume in Europe rose by 9.4% y/y to 1 million units. In Europe, sales increased by 5.0% y/y in Germany and by 12.6% y/y in the UK. BMW Group sold 686,000 vehicles in Asia, 4.2% more than the previous-year’s level, including sales in China which grew by 1.6% to 464,000 units. Sales volume in the America also increased by 2.8% to 496,000 units, including 406,000 units sold in the U.S.A., up 2.2% y/y. The BMW Group reported sales volume growth in all major regions.

 In its 2015 financial results the BMW Group posted new highs for revenue, EBIT, and net profit. The Group’s revenue grew by 14.6% y/y to EUR 92.2 billion; EBIT rose by 5.2% to EUR 9.6 billion; and net profit increased by 10% to EUR 6.4 billion.

 In 2016, the BMW Group is targeting a slight sales volume increase to mark another record with the positive impetus from the BMW 7 Series, X1, and MINI Clubman. Sales revenue is expected to grow moderately on the back of unit sales growth. EBIT will improve slightly with the Group’s strong brands, attractive product range, and an upward trend in international automobile markets.

BMW Group’s global unit sales by brand and region

(units)

  2011 2012 2013 2014 2015 January-March
2015 2016
BMW 1,380,384 1,540,085 1,655,138 1,811,719 1,905,234 451,576 478,743
MINI 285,060 301,526 305,030 302,183 338,466 74,312 78,311
Rolls-Royce 3,538 3,575 3,630 4,063 3,785 781 551
Total 1,668,982 1,845,186 1,963,798 2,117,965 2,247,485 526,669 557,605
Europe 858,400 865,400 859,500 914,587 1,000,427 234,849 257,120
(Germany) 285,300 287,400 259,200 272,345 286,098 64,610 66,649
(UK) 167,500 174,500 189,100 205,071 230,982 - -
(Rest of Europe) 405,600 403,500 411,200 437,171 483,347 - -
Americas 380,300 425,300 463,800 482,257 495,897 109,743 100,245
(USA) 306,300 348,500 376,600 396,961 405,715 91,479 81,601
Asia 375,500 493,400 578,700 658,384 685,792 166,678 183,204
(China) 233,630 327,300 391,700 456,732 464,086 115,078 127,167
Other regions 54,800 61,100 61,800 62,737 65,369 - -
Source: BMW Annual Reports, BMW Group Sales Releases issued on April 14, 2015/April 12, 2016

BMW Group’s consolidated business results

(in millions of EUR)

  2009 2010 2011 2012 2013 2014 2015
Production volume (units) 1,258,417 1,461,253 1,738,160 1,861,826 2,006,366 2,165,566 2,279,603
Revenues 50,681 60,477 68,821 76,848 76,059 80,401 92,175
EBIT 289 5,111 8,018 8,275 7,978 9,118 9,593
Profit before tax 413 4,836 7,383 7,803 7,893 8,707 9,224
Net profit 210 3,224 4,907 5,111 5,329 5,817 6,396
Source: BMW Annual Reports

The BMW Group’s 2016 targets

  • The BMW Group is targeting a slight sales volume increase to mark another record in 2016 with the positive impetus from attractive products like the new 7 Series.
  • The Group’s sales revenue and EBIT are expected to increase slightly.
  • The automotive division is targeting an EBIT margin of between 8.0 and 10.0%.

New strategic plan “Strategy NUMBER ONE > Next” (announced on March 16, 2016)

Outline The BMW Group sees the changes across the world of mobility through digitalization as an excellent opportunity to attract new customers. It will focus on expanding the scope of digital connectivity between people, vehicles, and services and broadening its technological expertise in the fields of electric mobility and automated driving.
Major strategies ・From 2016, BMW Group will have a total of 7 models that are EVs or a PHVs (including the facelifted BMW i3 compact EV that features increased battery capacity, which will be launched in late 2016, the BMW i8 roadster PHV scheduled to be released in 2018, and a plug-in-hybrid MINI). The Group also continues to develop hydrogen fuel-cell technology.
・The X7, a 7 Series SUV, will be launched in 2018.
・The BMW Group will utilize the advanced technologies adopted on the new 7 Series in other models. These include a system to make vehicles stay in a lane while maintaining a safe distance from the vehicle ahead when driving up to 210 km/h, and Remote Control Parking by which vehicles are able to park themselves.
Profitability target ・The BMW Group will target an EBIT margin of at least 10% for the period between 2017 and 2020.
Source: Statements for Annual Accounts Press Conference for 2015, BMW press release issued on March 16, 2016


Daimler foresees a lower growth rate as it expects record unit sales and revenue

Mercedes-Benz Cars' unit sales by region

 Daimler Group achieved record unit sales in 2015 with 2.85 million units sold, up 12.1% from the previous year. Unit sales for the Mercedes-Benz Cars division increased to pass the two-million mark for the first time with 2,001,400 units, up 16.2% y/y. From a regional perspective, unit sales in China climbed by 36.8% to 400,000 units, which underpinned overall growth. In the year 2015, China overtook the US and was for the first time the biggest sales market for Mercedes-Benz. An increase in local production boosted sales volume in China.

 In Western Europe, Mercedes-Benz sold 773,000 vehicles, up 15.7% y/y, to regain sales level from before the economic crisis in 2007. Unit sales in Germany increased and reached 296,000 units, up 8.5% y/y. Growth was stronger in the rest of Western Europe including Spain, Italy and the UK with unit sales in the region growing 20.6% y/y to 478,000 units. By model, increased sales of the C-Class (+38%) and the SUV segment (+27%) contributed to the unit sales growth.

 The Group reported 2015 revenues of EUR 149.5 billion, up by 15.1% y/y, EBIT of EUR 13.2 billion, up by 22.6%, and net profit of EUR 8.7 billion, up 19.5%. Both revenue and EBIT achieved record levels. The Mercedes-Benz Cars division’s EBIT climbed by 35.4% y/y to EUR 7.9 billion as a result of growth in sales volume and positive effects of exchange rates.

 In 2016, Daimler expects to achieve further growth in the Group’s unit sales and revenues, albeit at a slower rate than 2015. Significant growth is anticipated for passenger car and van divisions, as well as in Asia and Western Europe.

Mercedes-Benz Cars’ global unit sales by region (on a wholesale basis)

(units)

  2011 2012 2013 2014 2015 January-March
2015 2016
Western Europe   625,168 631,423 640,162 668,578 773,485 187,284 210,586
of which Germany 290,658 289,923 279,894 272,459 295,693 60,115 64,846
of which rest of Western Europe 334,510 341,500 360,268 396,119 477,792 127,169 145,740
USA 250,355 299,741 318,507 344,365 359,108 78,156 75,769
Asia   335,449 338,286 389,065 475,633 618,244 138,467 172,246
of which China 223,059 208,494 238,727 292,663 400,395 78,183 106,641
Other regions 170,444 182,119 217,829 233,985 250,601 54,439 60,339
Total 1,381,416 1,451,569 1,565,563 1,722,561 2,001,438 458,346 518,940
Source: Daimler Annual Reports, press releases issued on April 8, 2015/April 6, 2016

Daimler Group’s consolidated business results

(in millions of EUR)

  2009 2010 2011 2012 2013 2014 2015
Production volume
(1,000 units)
1,456 1,941 2,137 2,195 2,384 2,582 2,924
Sales volume
(1,000 units)
Passenger cars 1,094 1,277 1,381 1,452 1,566 1,723 2,001
Commercial vehicles 457 619 730 746 788 823 852
Total 1,551 1,895 2,111 2,198 2,354 2,546 2,853
Revenues Passenger cars 41,318 53,426 57,410 61,660 64,307 73,584 83,809
Commercial vehicles 28,813 36,394 42,348 44,388 44,947 46,575 53,164
Total 78,924 97,761 106,540 114,297 117,982 129,872 149,467
EBIT Passenger cars (500) 4,656 5,192 4,391 4,006 5,853 7,926
Commercial vehicles (792) 1,998 2,873 2,023 2,392 2,757 3,670
Total (1,513) 7,274 8,755 8,820 10,815 10,752 13,186
Net profit (2,644) 4,674 6,029 6,830 8,720 7,290 8,711
Source: Daimler Annual Reports
(Note)
1. Figures for passenger cars are from Mercedes-Benz Cars while those for commercial vehicles are the total
for Daimler Trucks, Mercedes-Benz Vans, and Daimler Buses. Production volumes represent the total of all the divisions.
2. The “totals” of revenues and EBIT include Financial Services division data.
3. Figures in brackets “( )” represent negative values.
4. Consolidated EBIT and net profit in 2014 include sales gains of EUR 1,006 million from Rolls-Royce Power
Systems Holding shares and a revaluation gain of EUR 718 million from Tesla shares. Consolidated EBIT and net
profit in 2015 include a charge of EUR 340 million related to the Takata airbag recall.

Daimler Group’s 2016 outlook

Group Daimler expects the overall Group will achieve further growth in unit sales and revenue in 2016, albeit at a slower rate than 2015. Significant growth is anticipated for the passenger car and van divisions. By region, the highest growth rates are expected in Asia and Western Europe. A higher level of profits is also expected while the effect from the exchange rate will be less pronounced in 2016. (In 2015, EUR 900 million was gained through exchange rates.) Daimler will increase its expenditures for research and development activities and capital in the years 2016 and 2017 to an average of EUR 7.2 billion (up 37% from 2015) and EUR 7.0 billion (up 9%), respectively.
Passenger car division Mercedes-Benz Cars is forecast to significantly increase its unit sales and achieve a new record. The luxurious GLS SUV launched in March 2016, and the new E-Class, which features a number of advanced safety and driving assistance systems, will provide major growth impetus. Additional PHV versions will be launched successively resulting in a total of ten models on the market in 2017. In 2016, significant growth in unit sales is expected in China, although the rate will be more moderate than the 36.8% achieved in 2015. Slight sales volume growth is expected in the US and Western Europe.
Van division Mercedes-Benz Vans is expected to achieve significant unit sales growth in 2016. The division anticipates a significant increase in sales volume in Europe, and additional growth in North America and China.
Truck division Daimler Trucks’ unit sales in 2016 are expected to be at the same level as the previous year. While sales in Western Europe are forecast to be slightly higher than in 2015, sales volume in Turkey and Brazil is projected to fall.
Bus division Daimler Buses anticipates unit sales in 2016 at the prior-year level. This is based on the assumption of moderate sales growth in Western Europe. The division continues to anticipate significant reduction in unit sales in Brazil while an ongoing positive development of sales is expected in Mexico.


PSA returns to profitability in 2015, unveils new “Push to Pass” strategy

PSA's unit sales by region

 On April 5, 2016, PSA announced that it will change its name from PSA Peugeot Citroen to “Groupe PSA.” The company also unveiled its new “Push to Pass” business plan for the period from 2016 to 2021. The Group reconstructed its financial affairs in 2015 under the previous “Back in the Race” business plan, and plans to deploy new products and technology around the world from here on.

 PSA Group’s global unit sales increased by 1.2% y/y to 2.97 million units in 2015. Sales volume in Europe grew by 5.9% y/y to 1.86 million units while deliveries in China and Southeast Asia region, which had been on an upward trend, declined by 0.9% to 736,000 units. Unit sales in South America and Eurasia (including Russia) continued to fall by 21.4% and 72.6%, respectively.

 The Group’s revenue in 2015 increased by 6.0% y/y to EUR 54.7 billion, while the automotive division’ s revenue grew by 4.0% to EUR 37.5 billion. PSA Group’s recurring operating income tripled to EUR 2.7 billion in 2015 from EUR 800 million in 2014. The automotive division’s recurring operating income also improved significantly from EUR 60 million to EUR 1.9 billion. According to PSA, the main growth drivers were the success of new models, pricing measures, and reduced fixed costs. The Group returned to profitability in 2015, increasing net profit to EUR 1.2 billion from a net loss of EUR 560 million in 2014. PSA previously set targets to generate an accumulated free cash flow of EUR 2 billion between 2015 and 2017 and to achieve a recurring operating margin of 2% for the automotive division by 2018, and of 5% for the period 2019-2023. The automaker achieved all of these targets in 2015.

 In the new “Push to Pass” business plan, PSA is aiming to improve its automotive recurring operating margin to an average of 4% by 2018 and 6% in 2021. The Group’s revenue growth from the 2015 level is projected to be 10% by 2018 and 15% by 2021.

PSA’s global unit sales by region

(1,000 units)

  2011 2012 2013 2014 2015 January-March
2015 2016
Europe 2,063 1,758 1,629 1,761 1,864 439 465
Other regions 1,486 1,207 1,189 1,178 1,109 273 235
China/Southeast Asia PSA revised its sales regions in 2014. 564 742 736 186 153
South America 303 200 157 36 42
Eurasia 74 44 12 2 2
India/Pacific 21 22 24 7 5
Middle East/Africa 227 169 180 43 33
Total 3,549 2,965 2,818 2,938 2,973 712 700
Source: PSA presentation materials, monthly sales (March 2016)
(Note) Figures include CKD units until 2012.

PSA’s consolidated business results

(in millions of EUR)

  2009 2010 2011 2012 2013 2014 2015
Revenue 48,417 56,061 59,912 55,446 53,079 51,592 54,676
(of which automotive division) 38,265 41,405 42,710 38,299 36,415 36,085 37,514
Recurring operating income (689) 1,796 1,315 (560) (364) 797 2,733
(of which automotive division) (1,257) 621 (92) (1,496) (1,039) 63 1,871
Net profit (1,161) 1,134 588 (5,008) (2,327) (555) 1,202
Source: PSA Full Year Results

PSA’s 2016 market outlook

  • In 2016, PSA expects to see an increase in automotive demand of 2% in Europe and 5% in China, but a decline of 10% in South America and 15% in Russia.

The new “Push to Pass” business plan (unveiled on April 5, 2016)

Outline In April 2016, PSA revealed its new business plan for the period 2016-2021. The Group reconstructed its financial affairs in 2015 and plans to deploy new products and technology around the world from here on. The aim is for profitable growth though anticipating changes in car usage patterns and meeting customers’ mobility needs.
Midterm targets ・Automotive division recurring operating margin: an average of 4% between 2016 and 2018 and 6% by 2021
・Group revenue: 10% growth from the 2015 level by 2018 and 15% growth by 2021 (at constant (2015) exchange rates)
Major strategies Strengthening product lineups: 26 passenger cars and 8 light commercial vehicles (including a 1-ton pickup) will be launched. By releasing one new car per region, per brand, and per year, lineups will be rejuvenated. (The life of an average model is expected to be 3.5 years in 2018.)
Enhancing core technologies: 7 PHVs and 4 EVs will be launched. Connected and autonomous vehicles will be released.


Renault achieves significant profit growth in 2015, aiming for further growth in 2016

Renault's unit sales by region

 Renault’s global unit sales in 2015 increased to 2.80 million units, up by 3.3% y/y. Among sales regions, Europe saw a 10.1% growth in unit sales at 1.61 million units owing to increased demand in Spain, the UK, and Italy. Sales volume in Europe surpassed the 1.6 million-mark for the first time in five years. However, unit sales in other regions fell for the second consecutive year to 1.19 million units, down by 4.7% y/y. Except for the Africa-Middle East-India regions, for which sales in Algeria, Morocco and India grew, all other regions reported sales declines. The Group felt the effects of diminished sales in Brazil, the second largest single market for Renault, and falling demand in Russia.

 In terms of brand, unit sales of the Renault brand rose by 2.4% y/y to 2.17 million units owing to strong sales of SUVs including the Capture and Kadjar. The Dacia brand also recorded 7.7% growth in unit sales with 551,000 units, mainly driven by the Logan. At the same time, the Renault-Samsung brand sold only 80,000 units, down 2.6% y/y.

 Renault’s revenues in 2015 rose by 10.4% y/y to EUR 45.3 billion thanks to increased unit sales and higher income from production of vehicles for Nissan at Samsung’s plant in Korea. Operating profit improved by 44.2% to EUR 2.3 billion. This significant growth is attributable to reduced cost and increased unit sales. Net profit also climbed to EUR 3.0 billion, up by 48.1% y/y.

 In 2016, Renault is aiming to increase Group revenues (at constant exchange rates), to improve its operating margin and continue to generate a positive operational free cash flow for its automotive division.

Renault’s global unit sales by brand and region

(1,000 units)

  2011 2012 2013 2014 2015 January-March
2015 2016
Renault 2,261 2,123 2,131 2,119 2,171 491 544
Dacia 343 360 430 511 551 137 132
Renault-Samsung 118 66 67 82 80 17 17
Worldwide 2,723 2,549 2,628 2,712 2,802 645 692
Europe 1,550 1,271 1,302 1,465 1,613 398 434
Other regions 1,173 1,278 1,326 1,247 1,189 247 259
Of which Eurasia Renault revised its sales regions in 2014. 412 390 356 69 67
Africa-Middle East-India 339 308 360 70 95
Americas 467 417 355 80 72
Asia-Pacific 108 133 117 28 25

Source: Renault earnings reports, Renault Group Sales (March 2016)

(Note)
1. Figures exclude Russian AvtoVAZ Lada brand vehicles.
2. Renault revised its classification of sales regions in 2014. Europe refers to both Western and Central Europe. Eurasia now includes Russia, the Commonwealth of Independent States, Eastern Europe (Romania, Bulgaria, etc.) and Turkey. The Asia-Pacific region now doesn’t include the Middle East and India which were shifted to the Africa-Middle East-India region.

Renault’s consolidated business results

(in millions of EUR)

  2009 2010 2011 2012 2013 2014 2015
Revenues 33,712 38,971 42,628 40,720 40,932 41,055 45,327
Operating profit (396) 1,099 1,091 782 1,242 1,609 2,320
Net profit (3,068) 3,490 2,139 1,712 695 1,998 2,960
Source: Renault earnings reports
(Note) Figures in brackets “( )” represent negative values.

Renault’s 2016 market outlook

  • Renault forecasts that the global market will record growth of 1-2% y/y. The European market is expected to increase by 2%. Among emerging markets, Brazil and Russia are projected to decline further by 6% and 12%, respectively. However, China (+4 to +5%) and India (+8%) are forecast to maintain their momentum.

Renault’s 2016 targets

  • Renault is aiming to increase the Group’s revenues (at constant exchange rates), to improve operating margins and continue to generate a positive operational free cash flow for its automotive division.
  • In 2016, Renault is scheduled to start production in China (in February, Dongfeng Renault began production at its Wuhan plant). The automaker also plans to launch 10 new models in global markets.


FCA completes Ferrari spin-off, aiming for profit growth in 2016

FCA's unit sales by region

 FCA completed the spin-off of the Ferrari luxury car unit in January 2016. FCA plans to raise capital to reorganize its business through measures that include floating its Ferrari shares. FCA excluded Ferrari operation from the disclosure of its 2015 business results.

 FCA’s global unit sales in 2015 were on par with the prior year at 4.61 million units. By region, sales in North America grew by 9.3% y/y to 2.73 million units and deliveries in Europe increased by 11.5% to 1.14 million units. At the same time, a significant decline in sales was recorded for South America and the Asia/Pacific. Sales in South America decreased by 33.1% y/y to 553,000 units and sales in the Asia/Pacific region fell by 32.3% to 149,000 units. By brand, Jeep achieved record unit sales at 1.3 million units. The Renegade small SUV and the Cherokee midsize SUV boosted sales volume.

 FCA’s 2015 revenues rose by 18.1% y/y to EUR 110.6 billion, while EBIT declined by 7.4% y/y to EUR 2.6 billion, and net profit fell by 74.1% y/y to EUR 90 million (net profit including Ferrari declined by 40.3% to EUR 377 million). In 2015, unusual expenses amounted to EUR 2,170 million including EUR 830 million for realignment of production capacities in North America, EUR 760 million for additional recalls, and EUR 140 million for NHTSA fines

 In 2016, FCA aims for Group revenues of EUR 110 billion, adjusted EBIT of EUR 5 billion, and adjusted net profit of EUR 1.9 billion. In January 2016, FCA revealed its updated “Five-year plan for 2014-2018” which was originally announced in May 2014. Since the plan has been implemented ahead of schedule, FCA revised its performance targets for 2018 upward.

FCA’s global unit sales by region

(1,000 units)

  2011 2012 2013 2014 2015 January-March
2015 2016
North America 1,783 2,115 2,238 2,493 2,726 587 634
Europe/Others 1,180 1,012 979 1,024 1,142 319 352
South America 929 979 950 827 553 153 109
Asia/Pacific 74 103 163 220 149 59 54
Luxury Cars 13 14 22 36 32 6 7
Total 3,979 4,223 4,352 4,600 4,610 1,125 1,155
Source: Fiat Group Annual Reports/FCA Full Year Results, FCA Monthly Sales Report (March 2016)
(Note)
1. Chrysler’s sales volumes are included from January 2011.
2. Luxury Cars includes Ferrari and Maserati sales until 2013 and only Maserati sales after 2014. (Ferrari was spun-off from FCA at the beginning of January 2016.)

FCA’s consolidated business results

(in millions of EUR)

  2011 2012 2013 2014 2015
Revenues 59,559 83,957 86,624 93,640 110,595
EBIT 3,467 3,541 3,002 2,834 2,625
Net profit (including Ferrari) 1,651 896 1,951 632 377
Net profit       359 93
Source: Fiat Group Annual Reports
(Note)

1. Chrysler’s results are included from June 2011.
2. Business results after 2014 exclude Ferrari unless otherwise noted.

FCA’s 2016 targets

In 2016, FCA aims for Group revenues of EUR 110.0 billion (EUR 110.6 billion in 2015), adjusted EBIT of EUR 5.0 billion (EUR 4.8 billion), and adjusted net profit of EUR 1.9 billion (EUR 1.7 billion). Profits in North America and Europe are expected to grow further. A small profit will be realized in South America when its Pernambuco plant in Brazil starts operations at full capacity in the second half of 2016. Profit is expected to increase in Asia when full-scale production of the Jeep brand vehicles starts in China in the second half of 2016.

FCA’s 2014-2018 business plan (revised in January 2016)

2018 targets revised upward
(excluding Ferrari)
  2015 results

Original 2018 targets
(May 2014 Plan)

Revised 2018 targets
(Jan. 2016 Update)

Revenues EUR 110.6 billion EUR 129.0 billion EUR 136.0 billion
Adjusted EBIT EUR 4.8 billion EUR 8.3-9.4 billion EUR 8.7-9.8 billion
Adjusted net profit EUR 1.7 billion EUR 4.5-5.3 billion EUR 4.7-5.5 billion
Net industrial (debt)cash (EUR 5.0 billion) EUR 1.9-2.4 billion EUR 4.0-5.0 billion
Jeep volume target The 2018 sales volume target for Jeep brand vehicles was raised to 2 million units (1.3 million units in 2015) based on increased sales in all regions, boosted production in North America, and the start of full-scale production in Brazil and China.

Alfa Romeo delays new models

Except for the Giulia (to be launched in 2016) and a midsize SUV (planned for 2017), the new model launch plan will be put off due to uncertainties in China and reduced R&D and product investment. The automaker’s planned product lineup will now be completed by mid-2020, two years behind the original plan.
Production in North America To better meet demand in North America, production capacity of pickup trucks and Jeep SUVs will be expanded by the end of 2017. FCA will realign installed capacity within existing plants without building new facilities. Production of compact cars and midsize sedans may be contracted out.


Production Forecast by LMC Automotive: French light vehicle production to be 2.14 million units in 2019

(LMC Automotive, March 2016)
French  light vehicle production forecast
(LMC Automotive)

 The stronger-than-expected European market recovery provided the boost to propel 2015 French light vehicle output volumes forward by 9.1% year-over-year (y/y) to 1.96 million units. According to LMC Automotive’s forecast released in March 2016, French output is expected to remain hovering below the 2.1 million-unit mark, at least until 2017. It is at this point that major model renewals will provide a tangible boost to French output. Annual production will gradually increase to 2.18 million in 2017 and to 2.24 million units in 2018. In 2019, French output is projected to decline to 2.14 million units.

 2015’s French car production volume represents less than half the output achieved ten years ago. With this significant decline in output, capacity utilization has been low in recent years. Capacity trimming at PSA’s Poissy and Mulhouse facilities as well as Renault’s Sandouville plant is helping to push utilization towards 69% in 2016. While this is still some way off the industry’s estimate of utilization required for profitability (75-80%), further restructuring is expected to take place in the longer term.

 PSA’s production volume is expected to edge up in 2016 by 2.4% y/y to 995,000 units. However, PSA’s output will slowly decrease after 2017 and fall to 937,000 units in 2019. Under PSA’s strategy to focus more of its higher-margin products in its higher-cost French location, volumes are expected to be more negatively affected. While DS-branded production is set to more than double for the period between 2016 and 2019, this volume growth will be insufficient to offset the fall in output elsewhere as low-margin small Citroen and Peugeot models are transferred to lower-cost plants in Europe.

 Renault’s output in France is anticipated to increase by 5.6% y/y to 676,000 units in 2016. This production growth will be underpinned by robust European demand for the Clio and Espace. In addition, Renault-Nissan is to introduce a series of actions to aid volume levels and boost utilization rates in France. For example, Renault-Nissan transfers production of the next Micra from India to the French plant from 2016. After 2017, Renault’s production will continue to increase to 762,000 units in 2018, but drops to 733,000 units in 2019.

French light vehicle production forecast by make (LMC Automotive, March 2016)

(Units)

  GLOBAL MAKE 2013 2014 2015 2016 2017 2018 2019
Total 1,721,645 1,793,308 1,955,971 2,041,633 2,184,201 2,241,405 2,143,179
PSA Group Peugeot 523,125 598,105 645,645 697,584 783,418 762,950 700,322
DS 116,738 89,243 80,965 79,295 101,144 129,558 197,306
Citroen 274,988 260,782 245,293 218,214 86,250 70,469 39,273
PSA Group sub-total 914,851 948,130 971,903 995,093 970,812 962,977 936,901
Renault-Nissan Group Renault 485,249 510,922 640,253 673,795 686,921 681,478 659,914
Nissan 0 0 0 2,408 68,553 80,534 72,603
Renault-Nissan Group sub-total 485,249 510,922 640,253 676,203 755,474 762,012 732,517
Toyota Group Toyota 192,135 207,283 218,985 225,276 220,094 248,072 222,756
Daimler Group Smart 98,239 87,195 86,457 105,870 119,076 123,773 109,466
Mercedes-Benz 17,736 23,879 22,670 21,600 25,325 30,629 29,983
Daimler Group sub-total 115,975 111,074 109,127 127,470 144,401 154,402 139,449
General Motors Group Opel 0 0 0 168 62,762 83,001 82,904
Fiat Chrysler Automobiles Fiat 13,416 15,880 15,222 15,267 28,260 28,539 26,334
Other Bollore 0 0 462 2,135 2,377 2,381 2,297
Sovam 19 19 19 21 21 21 21
Other sub-total 19 19 481 2,156 2,398 2,402 2,318
Source: LMC Automotive "Global Automotive Production Forecast (March 2016)"

(Note)
1. Data indicate figures of only small-size vehicles, including passenger cars and light commercial vehicles with a gross vehicle weight of under 6 tons.
2. All rights reserved. Reproduction of any data requires the permission of LMC Automotive.
For more detailed information or inquiries about forecast data, please contact LMC Automotive.

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