French automaker Renault and German auto supplier Robert Bosch GmbH are pointing to a broad slowdown in the global auto industry.
Renault warned the company’s revenue may decline this year as it revised its guidance, after first-half profit was hit by weakening car demand and an earnings drop at alliance partner Nissan, which has been engulfed by the scandal and controversy revolving around former Renault and Nissan chief executive Carlos Ghosn.
Renault’s net income slumped by more than half to 970 million euros, or $1.08 billion, during the first half of this year as revenue fell 6.4% to 28.05 billion euros, the French carmaker said on Friday. Operating profit also dropped 13.6% to 1.65 billion euros.
“Given the degradation in demand, the group now expects 2019 revenues to be close to last year’s,” Renault said, abandoning an earlier pledge to increase revenue before currency effects. Renault blamed falling sales in France, as well as Turkey and Argentina, for a 7.7% revenue drop at its core automotive business, whose profit margin slid to 4% from 4.5%.
Meanwhile, Bosch revised its forecast for automotive production last weekend and now expects a 5% decline this year, bigger than an earlier estimate for a 3% decline, the company’s chief financial officer told the German newspaper Boersen-Zeitung.
The slowdown in production means Bosch would not be able to achieve an earnings before interest and taxes, or EBIT, margin of 7% as it did last year, Bosch CFO Stefan Asenkerschbaumer told the newspaper.
The company had predicted a rise in revenue and an EBIT margin of 6% to 7% for this year, according to Reuters.
“We will not be able to repeat the high margin from last year given the development in revenues,” Asenkerschbaumer said, adding that he believed automotive production would stagnate over the next three years.
By 2025, however, Bosch expects to generate 5 billion euro, or $5.6 billion, in revenue from electric cars thanks to steady growth in this segment, particularly from China, he said.
Bosch has already supplied components for more than 1 million electric vehicles and expects revenues to grow since it has developed powertrains for 50 vehicle platforms for various manufacturers, he told the newspaper.