Renault May Raise UK Car Prices To Weather Brexit Storm

Thursday, Jun 30, 2016

French carmaker Renault is considering UK price rises to counter the pound's slump since Britain voted to leave the European Union, two company sources told Reuters on Wednesday after a briefing by senior management.

Renault will likely be forced to raise UK prices to the detriment of sales while stopping short of withdrawal from the market, Chief Financial Officer Clotilde Delbos warned during an internal presentation this week, according to both sources.

A Renault spokeswoman declined to comment. The company last year delivered almost 130,000 cars or 8 percent of its European sales total in Britain, its 7th biggest market.

Domestic rival PSA Group indicated within hours of the referendum result that it was likely to raise sterling prices.

The French carmakers are among the auto stocks worst hit by the Brexit vote, partly because they have significant UK sales but no local production.

 That makes it harder to cover euro-denominated costs with sales in pounds and means both companies are likely to lose ground in a market now expected to shrink about 10 percent in the second half of 2016.

Peugeot shares are down 21.8 percent and Renault down 16.3 percent since Friday's result, compared with a 12.5 percent decline for the Stoxx 600 Europe Autos & Parts index.

The pound gained about 0.4 percent against the dollar on Wednesday as market volatility eased, remaining close to the 31-year low struck two days earlier.


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