Carmakers fear EM gloom could overshadow European rebound

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26 Aug, 2025 12:21

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French carmaker Renault has trimmed its growth forecast for the global market this year as the industry becomes increasingly worried about volatile emerging markets just when demand in Europe is starting to pick up.

Renault's sales chief Jerome Stoll said at the Geneva auto show on Tuesday the group now expects global vehicle sales to rise by slightly less than the 2 percent previously forecast.

"While Europe is showing some signs of recovery, we are at the same time seeing some headwinds from emerging markets," he said, citing in particular weaker than expected demand in Russia, Argentina, Turkey and Algeria.

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After a six-year sales slump, Europe's car market is finally showing signs of recovery as even the countries hardest hit by the euro zone debt crisis move out of recession. Industry data on Monday showed car sales in Germany, Italy and Spain rose last month, although they dipped in France.

But some emerging markets such as Brazil and Russia have seen a slowdown in demand, and executives are concerned the latest bout of volatility sparked by Russia's intervention in Ukraine could lead to a further weakening as some currencies come under further pressure.

"Some countries have seen their currencies devalue by 20, 30 or 35 percent. That always has consequences ... very strong consequences if one doesn't produce locally," Christian Klingler, sales chief at Europe's biggest carmaker Volkswagen told Reuters at the show late on Monday.

RUSSIAN BEARS

Until recently, Russia had been tipped to overtake Germany to become Europe's biggest carmaker, drawing in investment from Western manufacturers including General Motors , Ford , Renault and Fiat .

But a slowing economy saw new car sales fall 5.5 percent last year, bringing three years of double-digit percentage growth to an end, and Russia's AEB auto association was forecasting another decline of 1.6 percent this year, even before the recent plunge in the rouble.

"We're a major trade partner of Russia and are looking at the Ukraine and Russia with concern," said VW's chief executive,

Martin Winterkorn.

Renault, which along with partner Nissan is one of the biggest car sellers in Russia, also said it was following events there closely. The pair build cars with OAO AvtoVAZ and are taking control of the Russian carmaker this year.

However, Stoll said Renault was better positioned in the event of a collapse of the rouble than many rivals operating in the country because it sourced many parts locally.

Citi analysts estimate Russia accounted for about 8 percent of Renault's worldwide sales last year and that the group's exposure to the country was worth about 2.3 euros a share, compared with its 88 euros target price for the stock.

ENCOURAGING SIGNS

Despite the concerns about some emerging markets, car industry executives remain mostly optimistic, pointing to the continued strength of demand in China, the world's biggest auto market, and improvements elsewhere.

"We have seen the levelling out in western Europe over the last year and the very first sign that it can become stronger now," said Ralf Speth, the chief executive of Tata Motors' luxury British carmaker Jaguar Land Rover.

"We're seeing the US recovering more, and we still see a very solid China," he added, while conceding uncertainty over events in Ukraine made it hard to make predictions.

Renault's Stoll was also encouraged by the strength of recovery in previously crisis-hit European countries such as Italy, Portugal and Spain, and said the reduction to the group's global growth forecast was just a minor adjustment.

"It's a question of tenths of a percentage point," he said.

Meanwhile Daimler's chief executive Dieter Zetsche appeared to take a slightly more optimistic view, forecasting 3 percent growth in the global passenger car market this year.