PARIS, Feb 19 (Reuters) - Renault Group posted a 15% drop in 2025 operating profit on Thursday and guided for lower margins in 2026 as price pressures from rising Chinese competition and traditional peers in its core European market erode earnings.
The French automaker, which has been led by new CEO Francois Provost since the summer, 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.
It reported an operating profit of 3.6 billion euros ($4.24 billion), in line with the consensus forecast of analysts compiled by the company, and an operating margin of 6.3%. It said it was targeting a group operating margin of around 5.5% in 2026 and between 5% and 7% in the medium term.
Faced with price pressure from Chinese brands arriving in Europe and larger rival Stellantis' aggressive sales strategy to regain market share, Renault is also seeing its margins eroded by its expansion in overseas markets, where profitability is lower, as it looks to achieve economies of scale and reduce its dependence on Europe.
It is banking on its Duster SUV to help grow its Indian business, while also expanding in South America.
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.
Renault will meanwhile continue to target lowering variable costs by around 400 euros per vehicle, chief financial officer Duncan Minto told journalists on a call, after achieving the target in 2025.
The group 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 a one-off writedown of 9.3 billion euros in July on its stake in struggling partner Nissan.
Renault said it would pay a dividend of 2.20 euros, unchanged from what it paid in 2024.
Shares in Renault fell 25% during 2025, and are down about 8% year to date, less than Stellantis which is down 30% so far this year.
($1 = 0.8484 euros)
(Reporting by Gilles Guillaume and Dominique Patton; Editing by Christian Schmollinger and Lincoln Feast.)
By Gilles Guillaume and Dominique Patton
