Emerging-market growth to slow in 2009: Carlos Ghosn

Renault SA, France's second-largest carmaker, expects sales growth in emerging markets to slow to an average of 10 per cent next year, about half the expected rate for 2008.

“There are signs emerging-market sales will keep growing, while at a lower pace,” Chief Executive Officer Carlos Ghosn told reporters in Curitiba, Brazil, today. “Emerging markets made up for falling sales in mature countries last year, and this scenario is still the same today.”

Renault is releasing new models and increasing production in countries such as Brazil as weaker economic growth and rising unemployment lead to falling demand in Europe and parts of Asia. European auto registrations declined 2 per cent in the first half of the year, according to the Brussels-based European Automobile Manufacturers’ Association. Brazilian vehicle sales rose 30 per cent over the same period.

Ghosn said he expects sales in China to rise less than 10 per cent next year, while demand in Russia and the Middle East should increase at a faster pace.

Renault rose ¤2.66, or 4.7 per cent, to ¤59.16 in Paris today. The Boulogne-Billancourt, France-based carmaker's stock has dropped 39 per cent this year, compared with a 23 per cent decline for the Bloomberg Europe Autos Index.

Lower Target: Rising raw material costs and faltering European auto sales prompted Renault on July 24 to slash its 2009 global sales target by 10 per cent and pledge as many as 6,000 job cuts to meet profit goals.

Ghosn last month outlined plans to scrap some vehicle programs, reduce European production and lower non-production costs by 10 per cent amid dwindling sales in Renault’s home market. He scaled back the automaker's ambitions in upscale vehicles by shelving development of a range of successors to the aging Espace minivan.

The company released the fifth of the six models today that it plans to begin selling in Brazil through 2009. The automaker’s production is expected to rise to 200,000 vehicles by 2010 from an estimate 156,000 units this year.

“The global market is still growing, but in very different scenarios,” Ghosn said today. “We expect our sales in Brazil to keep rising at a fast pace over the next few years.

Brazilian Market: Brazil's fastest economic growth in four years and record bank loans are fueling demand for durable goods such as vehicles, computers and electronics.

Anfavea, as the Brazilian automaker association is known, forecasts sales will rise to a record 3.06 million vehicles this year, a 24 per cent increase from 2007.

At the current pace of growth, “a slowdown may only occur next year,” Jackson Schneider, the association’s head, said on Aug 6.

Renault is investing 1 billion reais ($621 million) in Brazil between 2005 and 2009 to introduce new products and boost production capacity. The company expects sales to total 130,000 vehicles in 2008, above a previous estimate of 106,000 units.

The carmaker, the fifth largest in Brazil, almost doubled sales in the country in the first seven months of the year. Registrations of Renault models totaled 65,200 units January through July, compared with about 33,100 units in the same period a year earlier, according to Anfavea.