Renault forecasts 2026 margin drop as price pressure dents profit

By Gilles Guillaume and Dominique Patton

PARIS, Feb 19 (Reuters) - Renault Group RENA.PA forecast lower margins for 2026 on Thursday as it reported a 15% fall in operating profit last year, denting its shares as the French carmaker grapples with growing price pressure from Chinese and traditional rivals.

Shares in Renault were down almost 6% at 1050 GMT as the market digested results from the group, which has been led by new chief executive Francois Provost since the summer.

Renault had warned of weakening margins in July after market conditions deteriorated in the second quarter, particularly in the European van market where the Renault brand is the leader.

While Renault said its van business will grow again in 2026, fierce competition in passenger cars is set to continue as more Chinese brands arrive in Europe and its larger rival Stellantis pursues an aggressive sales strategy to regain market share.

"Last year, several competitors pushed a lot on price. This is not our strategy," Provost told analysts on a call, adding that Renault was "ready to fight" Chinese competition with lower costs and a rapid pace of new model launches such as the new Clio 6 or next generation Twingo.

"I don't underestimate the strong Chinese push ... but I think that with our strategy, our recipe, we will be capable to sustain growth in Europe in the coming years," he added.

Renault posted operating profit of 3.6 billion euros ($4.24 billion) for 2025, in line with a consensus forecast of analysts compiled by the company. Pricing pressures accounted for more than 700 million euros of the profit drop.

It recorded a group operating margin of 6.3% for last year, down from a record of 7.6% for the year before, and said it is targeting around 5.5% in 2026 and between 5% and 7% in the medium term.

Meanwhile, growth in overseas markets helped Renault lift sales volumes by 3.2% in 2025 to 2.34 million vehicles, and bring revenues to 57.9 billion euros, up 3% on the prior year.

It is banking on its Duster SUV to help grow its Indian business, while also expanding in South America, as it looks to achieve economies of scale and reduce its dependence on Europe.

But profitability was also lower in overseas markets and Renault will continue to target lowering variable costs by around 400 euros per vehicle, its chief financial officer Duncan Minto told journalists on a call, after achieving this in 2025.

Renault reported a full-year net loss on a group share basis of 10.9 billion euros, its first loss in five years, largely due to the one-off writedown of 9.3 billion euros in July on its stake in struggling partner Nissan 7201.T.

The group said it would pay a dividend of 2.20 euros, unchanged from 2024.

Renault stock fell by 25% in 2025 and are down about 8% year to date, less than Stellantis STLAM.MI which is down 30%.

($1 = 0.8484 euros)