Renault has been hit by what it calls “a rapid and brutal downturn” which took its operating margin from 1.35bn Euros (£1.21bn) in 2007 to just 212m Euros (£191m) in 2008.
Speaking this morning in Paris, Renault President and CEO Carlos Ghosn blamed a “financial and economic crisis of massive proportions that hit the global market in 2008”.
The company says that the controversial 3bn Euro (£2.69bn) loan from the French government was essential to keeping the company running and that Renault would also look to borrow another 400m Euros (£360m) from the European Investment bank.
Renault revealed a breakdown of its market performance in 2008; it showed an extraordinary collapse in the fourth quarter, after what had been a strong start to the year.
The severity of the downturn is reflected in the company’s profit margins, which dropped from between 2.5 and 3 per cent in October 2008 to just 0.6 per cent in December 2008.
In the first quarter of 2008, Renault saw registrations up by 6.5 per cent and revenue up by 4.2 per cent. The figures were still positive in the second quarter but by the third quarter, registrations were down by 3.5 per cent and revenue 2.2 per cent.
However, the final quarter of the year saw registrations down 21.8 per cent and revenues down 30 per cent. As a consequence, Renault had to slash new car production by 45 per cent.
Although Renault’s 2008 global sales were only down 4.1 per cent compared with the previous year and European sales down 7.2 per cent, there are fears that 2009 will see sales figures plummet by as much as 40 per cent.