RNO.PA - Renault SA

Paris - Paris Delayed price. Currency in EUR
17.93
-1.44 (-7.45%)
At close: 5:36PM CET
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Previous close19.37
Open19.83
Bid0.00 x 0
Ask0.00 x 0
Day's range17.80 - 19.85
52-week range12.77 - 64.20
Volume2,196,394
Avg. volume2,798,261
Market cap5.192B
Beta (5Y monthly)1.63
PE ratio (TTM)N/A
EPS (TTM)-0.52
Earnings date14 Feb 2019 - 18 Feb 2019
Forward dividend & yield1.10 (5.68%)
Ex-dividend date30 Apr 2020
1y target est84.17
  • Reuters

    Mitsubishi Corp could take Renault stake in alliance rejig - sources

    Japan's Mitsubishi Corp could potentially invest in Renault as part of scenarios being discussed to reinforce an alliance between the French carmaker, Nissan and Mitsubishi Motors, two sources familiar with the matter said. French newspaper Les Echos reported earlier on Thursday, citing an unnamed executive familiar with the discussions and other unnamed sources, that Mitsubishi Corp, a conglomerate with a 20% holding in Mitsubishi Motors , could take a 10% stake in Renault. Renault declined to comment.

  • Mitsubishi Corp could take Renault stake in alliance rejig: sources
    Reuters

    Mitsubishi Corp could take Renault stake in alliance rejig: sources

    Japan's Mitsubishi Corp could potentially invest in Renault as part of scenarios being discussed to reinforce an alliance between the French carmaker, Nissan and Mitsubishi Motors, two sources familiar with the matter said. French newspaper Les Echos reported earlier on Thursday, citing an unnamed executive familiar with the discussions and other unnamed sources, that Mitsubishi Corp, a conglomerate with a 20% holding in Mitsubishi Motors , could take a 10% stake in Renault. Renault declined to comment.

  • Auto Giants Across the Globe Warned of Coming ‘Credit Shock’
    Bloomberg

    Auto Giants Across the Globe Warned of Coming ‘Credit Shock’

    (Bloomberg) -- BMW AG, Ford Motor Co. and Toyota Motor Corp. were downgraded by Moody’s Investors Service and their major European, U.S. and Japanese competitors were put under review for possible cuts as the coronavirus pandemic raises risks for automakers worldwide.BMW, the European carmaker with the best credit profile, was dropped one level to A2, while Ford’s rating fell to Ba2, another rung into junk. Moody’s put General Motors Co. under review along with Daimler AG, Jaguar Land Rover Automotive Plc, PSA Group, Renault SA, Volkswagen AG, Volvo Car AB and McLaren Holdings Ltd. In Japan, Toyota, Nissan Motor Co. and Honda Motor Co. were downgraded on Thursday.The rapid spread of the outbreak, a deteriorating economic outlook, falling oil prices and asset price declines are “creating a severe and extensive credit shock,” Moody’s said in a statement. “The combined credit effects of these developments are unprecedented.”Auto manufacturers and their parts suppliers have halted factories on both sides of the Atlantic amid government measures to isolate populations and restrict travel. The wave of work stoppages occurred as the viral epicenter moved to Europe from China and intensified in the U.S., halting sales and rippling through supply chains.Demand will drop “meaningfully” over the coming months, especially in Europe and North America, Moody’s said. It anticipates global demand will shrink about 14% in 2020 and could slump by roughly a third in the second quarter.‘Under Pressure’Japanese automakers are especially vulnerable because of the pandemic exacerbating “pronounced cyclical downturns and changing consumer demand,” Moody’s said, leaving them “vulnerable to shifts in market sentiment in these unprecedented operating conditions.”Toyota, which had the strongest credit profile among Japan’s auto companies, was cut to A1 from Aa3, while Honda was downgraded to A3 from A2. Nissan, which has seen decade-low profits and management turmoil since the November 2018 arrest of former Chairman Carlos Ghosn, was already the lowest in terms of credit ratings out of Japan’s top three carmakers. Moody’s cut Nissan’s rating to Baa3 from Baa1.Moody’s for now assumes GM and Ford’s full-year shipments will drop by as much as 18%, though it warned “risk to the downside is considerable.” GM shares pared a gain of as much as 9.6% to close up only 1.8% in New York. Ford, which had surged as much as 19% intraday, finished the day with an 8.9% advance.S&P Global Ratings still ranks Ford one step above junk. On Wednesday, the firm also put GM’s rating on watch for negative action.“Automaker credit rankings are increasingly under pressure -- another negative catalyst for bondholders -- and we suspect more downgrades loom globally, with Ford and Renault possibly becoming fallen angels,” Bloomberg Intelligence analyst Joel Levington said in a note.While GM probably can avoid a junk rating, falling into speculative grade causes problems for automakers’ lending units, Levington said by phone. Both GM and Ford get lots of cash from writing auto loans, and lower-rated debt makes borrowing more expensive.“It’s not the end of the world if one of these companies falls into high-yield,” he said. “But both Ford and GM make a lot of money from financing and their margins would go down.”State SupportFrench Finance Minister Bruno Le Maire this week pointed to the country’s auto and aeronautics industries as needing government support. The state has holdings in Renault and PSA. While Renault Chairman Jean-Dominique Senard has dismissed a re-nationalization of the carmaker, he told Le Parisien the firm may ask for government guarantees. Renault shares rose as much as 2.8% in Paris.VW brand’s global sales chief Juergen Stackmann told Frankfurter Allgemeine Zeitung in interview he expects a “normalization” of the situation on the German manufacturer’s home turf in the summer. The coronavirus won’t disappear entirely by then, but society and the economy can’t cope with a shutdown that lasts for longer, he said.The outlier in Moody’s latest report was Fiat Chrysler Automobiles NV, placed under review “with uncertain direction.” The Italian-American manufacturer faces the same daunting situation as peers, but the planned merger with PSA might potentially result in a higher rating of the combined group than Fiat Chrysler’s current standalone rating, it said.BMW’s downgrade was driven by its already weak standing within the A1 ratings category, the agency said.The Munich-based carmaker last week warned that both profit and sales would fall significantly this year as the pandemic disrupts production and supplies. The company has idled its European plants, as well as its largest plant in the U.S. in South Carolina, for more than two weeks.(Updates with Japanese automakers’ rating cuts.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Coronavirus: Renault aims to avoid nationalisation
    Yahoo Finance UK

    Coronavirus: Renault aims to avoid nationalisation

    "Remember that in 2008-2009 we never got to that point.”

  • Renault aims to avoid renationalisation - chairman
    Reuters

    Renault aims to avoid renationalisation - chairman

    Renault may seek French government guarantees to bolster its finances in the face of the coronavirus crisis, but a renationalisation of the carmaker is not being considered, Chairman Jean-Dominique Senard told Le Parisien newspaper. "We may seek state guarantees like other companies," Senard was quoted as saying by the French daily. Invoking the last global financial crisis, when Renault received a 3 billion euro ($3.2 billion) government loan, Senard said a renationalisation was "not on the agenda" as things stand.

  • Renault board to meet, discuss coronavirus crisis: sources
    Reuters

    Renault board to meet, discuss coronavirus crisis: sources

    The board of French carmaker Renault will meet on Friday to discuss the coronavirus outbreak and its effect on operations, three sources close to the company said. The health crisis has hit auto firms and their suppliers hard, and Renault has now suspended industrial activity in France and Spain and shut factories in Morocco and Romania too. The French government, which has a 15% stake in Renault, has said it would stand behind its big companies by whatever means necessary and even evoked nationalisations, though it has yet to take any concrete steps and has not named any firms.

  • What Happens to a Car Sector That Can’t Make Cars?
    Bloomberg

    What Happens to a Car Sector That Can’t Make Cars?

    (Bloomberg Opinion) -- What will become of the car industry if it cannot build cars? With car plants on both sides of the Atlantic shutting down for the next few weeks due to coronavirus, we’re about to find out.When the global financial crisis struck a decade ago, many U.S. and European carmakers idled production to prevent a build-up of unsold vehicles.This time, though, the shutdowns are happening simultaneously and slumping demand isn’t the only problem carmakers face. Workers are understandably fearful to step onto crowded production lines, plus the supply of key components risks being disrupted.Manufacturers hope the production hiatus will be brief but that could prove to be wishful thinking because the virus is a long way from being under control. (The fact that some have offered to re-purpose factory space to produce life-saving ventilators underscores the severity of this global health emergency).Even without coronavirus, 2020 was shaping up to be a difficult year for the car industry due to the massive cost of developing electric vehicles and overhauling factories to build them.Unlike a decade ago, when General Motors Co. and Chrysler sought bankruptcy protection, most carmakers have big cash piles they can draw on to tide them over a difficult period. Even after a 26 billion euros ($28 billion) cash outflow due to its diesel cheating, Volkswagen AG has 24 billion euros of cash and equivalents at its disposal.That’s fortunate, because due to high fixed costs and so-called negative working capital, much of the industry will burn through a lot of money.(1) (Besides protecting employees from potential virus exposure, one positive about closing plants is limiting the cash burn from rising vehicle inventories). In an extreme scenario Ford Motor Co and GM could each burn close to $4 billion of cash per month, say analysts at Morgan Stanley.  Meanwhile, if unemployment spikes, carmakers that lease lots vehicles via captive financial services divisions could be exposed to rising bad debts. In 2008, BMW AG had to take a 2 billion euros provision against loans going sour and falling values of used vehicles.It’s no wonder then that carmaker stocks have halved in value since the start of the year and the cost of insuring their debt against default has rocketed. Those with the weakest balance sheets have suffered most.The market capitalization of Renault SA, which struggled to generate positive free cash even before the virus showed up, has shrunk to less than 5 billion euros; adjusted for the 43% stake Renault owns in alliance partner Nissan Motor Co the equity value is negative.Jaguar Land Rover, owned by Tata Motors, is looking particularly sickly: 650 million euros of senior unsecured debt due in 2024 has tumbled to 60% of face value, yielding 17% — signalling concerns credit investors might not get all their money back.While the argument for consolidation is stronger than ever, so is the need to preserve cash. It’s questionable whether it’s still appropriate for Fiat Chrysler Automobile NV to pay its shareholders a 5.5 billion euros dividend prior to consummating a merger with Peugeot SA. Fiat’s balance sheet was already one of the weakest of the major car makers.Unlike in some service industries, car sales should eventually pick up some of the slack. Vehicles age and need replacing whereas a restaurant meal not consumed last week doesn’t necessarily mean you’ll have two the next.Plenty of folks cooped up at home will be dreaming of taking a long road trip when this is all over, encouraged no doubt by the cheaper cost of fuel.  But in the short term demand will probably fall hard – Chinese sales plunged 80% in February when much of the country was on lockdown. Consumer purchase incentives or government tax breaks probably won’t be as effective as in 2008-2009 because consumers can’t leave their homes.A car industry that can’t build cars won’t sell them. This year will see the paths of the better capitalized and financially weak firms diverge. It may not be immediate, but demands for external support, whether from taxpayers or shareholders, will come.(1) The German carmakers typically don't have negative working capital.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Carbon Collapse Signals European Industrial Energy Use Falls
    Bloomberg

    Carbon Collapse Signals European Industrial Energy Use Falls

    (Bloomberg) -- Plunging demand for carbon allowances signals that industrial use of energy is declining as companies shutter factories and reduce workshifts across the European Union.Stung by the coronavirus pandemic, European nations are increasingly locking down sections of their economy to keep people apart and slow the spread. That’s led to less need for pollution certificates as factories and businesses curtail emissions by shutting down.Permits dropped as much as 18% on Wednesday, their biggest intraday decline in 18 months. A clear sign of market slack appeared the day before when the European Energy Exchange AG canceled its auction for carbon allowances because bidding fell below the volume available for sale. It’s the first time a sale was canceled since June. A sale by the U.K. on Wednesday attracted fewer bids than average, but cleared after prices fell even more.“Some industrial consumers and power generators are probably selling carbon allowances because they can see they’ll need fewer permits as the coronavirus hits output,” said Nick Campbell, a director at industry consultant Inspired Energy Plc.Carbon’s two-fifth drop so far this month is much faster than natural gas at 6%. Still, it’s a slower pace than Brent crude oil, which has almost halved.The European transition to climate-neutrality by the middle of the century will require policies to help economies recover from the pandemic, including changes to the bloc’s carbon market, Poland’s climate ministry said Wednesday.Car makers including Volkswagen AG, BMW AG, Renault SA, Ford Motor Co., Daimler AG, Nissan Motor Co. and Toyota Motor Corp. all have said they would scale back production in Europe.Germany, the EU’s biggest CO2 polluter, cut emissions by 6.3% last year, the largest drop since the financial crisis in 2009, the country said Monday.In Italy, the European country hardest hit by the virus so far, power demand in the early evening Tuesday was expected to be about a fifth lower than a year ago.An Italy-style lockdown could trim power EU demand by 15%, according to Elchin Mammadov, an analyst at Bloomberg Intelligence. Several steel mills have closed in the country, according to Metal Bulletin.The carbon program’s options market is also signaling weak demand for allowances, with traders preferring downside protection in recent weeks as futures fell.In the global financial crisis more than a decade ago, some industrial companies were using their free carbon allowances as a form of finance. Not only do most manufacturers get free permits, they also receive them more than a year before they’re needed.They can sell the spot allowances for cash and buy futures, giving them additional no-risk cash flow. Carbon allowances fell 29% in 2008 and another fifth the following year.The dramatic slowdown of economic activity in Europe is dampening demand for allowances and commodity markets more generally are in “panic mode,” Barbara Lambrecht, analyst at Commerzbank AG, said early Tuesday.The carbon price collapse shows “weakening” need for the permits because of the health crisis, electricity supplier Energi Danmark A/S said Wednesday. “The downtrend is set to continue today.”(Adds industry comment in the fourth, carmakers in the eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bloomberg

    Europe’s Door to Joint Debt Cracks Open as Germany Softens

    (Bloomberg) -- Angela Merkel signaled she may be open to joint European Union debt issuance to help offset the impact of the coronavirus, an apparent softening of entrenched German opposition that could transform the finances of the 27-nation bloc.The unexpected opening from the leader of Europe’s dominant economy came after the chancellor and her EU counterparts agreed by video conference to restrict most travel into the continent in an unprecedented move aimed at slowing down the spread of the virus and mitigating its effects.European governments continued to mobilize resources to try to shield companies, preserve jobs and reassure investors as citizens are ordered to accept draconian curbs on daily life. With central banks almost out of ammunition, leaders are scratching their heads for ways to finance the sudden burst of spending without reviving the market turbulence that threatened to tear their currency union apart less than a decade ago.“We made clear, and actually everybody mentioned this, that we have to factor in serious, very serious, consequences for our economy,” Merkel said late Tuesday at a news conference in Berlin.EU health, interior and transport ministers are due to hold more talks on Wednesday on how to best tackle the disease and limit its wider impact.Spain and the U.K. joined Germany and France is announcing billions to support businesses at risk of going bust. French Finance Minister Bruno Le Maire even went so far as to say officials in Paris are prepared to consider nationalizing large companies if necessary. In the U.S., Donald Trump is considering an economic stimulus of as much as $1.2 trillion.“We must act like any wartime government and do whatever it takes to support our economy,” U.K. Prime Minister Boris Johnson said.The gravity of the situation is forcing policy makers to get creative, and quickly. The idea for joint EU debt issuance was raised by Italian Prime Minister Giuseppe Conte on Tuesday’s video call, according to a person familiar with the matter. Merkel said she was happy for her finance chief, Olaf Scholz -- a pro-European Social Democrat -- to explore the proposal with other ministers.Joint EU debt remained a taboo for Germany even at the height of the financial crisis after 2008, so the fact that Merkel is prepared to engage in the discussion is a sign of how concerned leaders are at the recession they are facing and the havoc it may wreak on its weaker members.‘No Conclusions’“We expect the finance ministers to discuss further on this level,” Merkel said. “I’ll talk to Olaf Scholz so that the German side can take part in this. But there are no conclusions.”Dutch Prime Minister Mark Rutte, another longstanding opponent of pooled liabilities, was more cautious on joint debt after Tuesday’s EU video conference. He said the EU has tools in place that could serve that function, and he hasn’t seen “a serious and real proposal for a coronavirus bond.”Conte reiterated that EU governments must do “whatever it takes” to deal with the crisis, adding that no country can hope to shield itself from its impact. Delaying a joint response, he added, would be lethal and irresponsible.Italy is at the epicenter of the virus outbreak in Europe. For many policy makers, the country was already the bloc’s riskiest member: it has a bigger debt load than any country but Greece, growth has been moribund since it joined the euro, and the size of its economy makes the prospect of a bailout daunting.Weak LinkFrance backed Italy’s request and wants the European Investment Bank to issue the bonds, possibly with guarantees by the European Stability Mechanism, the euro-area bailout fund, an official familiar with the matter said.Conte said that the EU must ensure that citizens receive the care they need and that their economic and social conditions are protected, according to the person familiar with the call. He said a European guarantee fund could be an alternative way to ensure the financing of relief measures.EU leaders also discussed ways the ESM could deploy its 410 billion-euro firepower. During that discussion, Merkel cautioned that it would be difficult to use money from the bailout fund without any conditions attached, while Rutte was even more skeptical, according to an EU official with knowledge of the exchange. Still, neither of them shot down the idea, the official said.More LockdownsIn other developments Tuesday, Belgium drastically tightened its restrictions on citizens, banning all unnecessary movements, keeping only food stores and pharmacies open for customers. Brussels, its capital, is home to the EU’s executive arm and NATO.The EU also closed its external borders for 30 days. The restrictions will be implemented by member countries over the coming hours. In theory, the ban does not apply to the U.K., but in practice any form of travel has become virtually impossible.The virus is not just rewiring people’s lives, but also forcing businesses to rethink how they operate.Europe’s biggest industrial manufacturers from Volkswagen AG to Airbus SE took unprecedented steps to idle plants across the region. Carmakers PSA Group, Fiat Chrysler Automobiles NV and Renault SA are also suspending production, and Mercedes-Benz maker Daimler AG said its halts would affect car, van and truck plants.BMW AG on Wednesday abandoned hopes for another record year in sales, predicting deliveries will be “significantly below” 2019 levels and profitability the weakest for years. The German carmaker skirted plant shutdowns and instead will rely on shorter shifts and flexible working to rein in output.(Updates with ministers’ talks in fifth paragraph, BMW in final paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Renault halts Spain operations after state of emergency declared
    Reuters

    Renault halts Spain operations after state of emergency declared

    French carmaker Renault said on Tuesday that it was halting operations in Spain following the declaration of a state of emergency there in light of the coronavirus crisis. "Groupe Renault has decided to stop its industrial activity in Spain for the duration of the state of emergency," Renault said in a statement.

  • Here’s How Much Money Countries Have Pledged for Virus Relief
    Bloomberg

    Here’s How Much Money Countries Have Pledged for Virus Relief

    (Bloomberg) -- Governments around the world have pledged more than $1.9 trillion in fiscal support as they rush to contain the coronavirus and shore up financial markets and businesses.Among the latest additions, U.S. President Donald Trump signed a second relief package as Canada, Eastern Europe and Turkey bumped up stimulus.Some governments have allocated new money for cash handouts and medical care, while several are planning targeted measures like tax breaks and loan support. Bank guarantees have started to take up an increasing share of the aid.Here’s a look at what governments have pledged so far, generally in order of their announcements:For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Exclusive: Nissan to pull out of venture fund with Renault in cost-cutting drive, sources say
    Reuters

    Exclusive: Nissan to pull out of venture fund with Renault in cost-cutting drive, sources say

    Nissan Motor Co is likely to pull out from a venture capital fund it runs with alliance partners Renault SA and Mitsubishi Motors, as part of the Japanese automaker's drive to cut costs and conserve cash, two sources said. Nissan will formally take a decision on whether to leave the fund, Alliance Ventures, by the end of this month, the two Nissan insiders told Reuters, declining to be identified because the information has not been made public. The likely move comes after Nissan's junior partner, Mitsubishi Motors Corp , told an alliance meeting last week that it would no longer continue to inject money into the fund, one of the sources said.

  • Reuters - UK Focus

    Nissan pushes on with new vehicle plan at UK factory despite Brexit warning

    Nissan is pushing on with plans to build its new Qashqai sports utility vehicle at its British factory despite warnings over Brexit, announcing on Friday a 52-million pound investment in a new press line at the site. The Japanese carmaker has said that if Britain's departure from the European Union leads to tariffs, its European business, which also includes a plant in Barcelona, would be unsustainable. It said it would build the new Qashqai at its northern English Sunderland site in 2016 after government reassurances that Brexit would not hit competitiveness, reflecting how far in advance investment decisions are made for a vehicle due around the start of 2021.

  • Reuters - UK Focus

    Motor racing-FIA could not prove Ferrari's 2019 engine broke F1 rules

    Formula One's governing body suspected Ferrari's engine was not always operating within the rules last year but lacked conclusive evidence, the FIA said on Thursday. The FIA explained in a statement that it had therefore reached a private settlement to avoid lengthy litigation and an uncertain outcome. The confidential settlement, announced last week on the last day of pre-season testing, angered non-Ferrari powered teams who issued a joint statement on Wednesday demanding clarity and threatening legal action.

  • Renault's Alpine goes further upmarket as it looks beyond France
    Reuters

    Renault's Alpine goes further upmarket as it looks beyond France

    Renault's Alpine brand will launch a more luxurious version of its sleek A110 sports car as it looks to branch out from its core French market and consolidate a jump in sales last year, its chief executive said. The Renault group, which also makes budget Dacia cars, revived the Alpine brand and its two-seater models in 2017, updating a classic design which hit a peak in the 1960s and 70s. Pricier models like the Alpine could help improve the group's profitability and growth in the longer run as the brand goes even more upmarket and plans more launches, Alpine Chief Executive Patrick Marinoff told Reuters.

  • Reuters - UK Focus

    Motor racing-Mercedes head for Australia as top team in F1 testing

    Formula One champions Mercedes will head to Australia for the March 15 season-opener as the top team in testing but with rivals Ferrari and Red Bull hinting at hidden pace. Valtteri Bottas produced the quickest lap from the six days of testing at the Circuit de Catalunya outside Barcelona and also on the final Friday. "It feels good to wrap up testing at the top of the leaderboard and end two intense weeks for the team with a decent final day on track," said technical director James Allison.

  • Carmakers gear up for Geneva Motor Show amid coronavirus turmoil
    Yahoo Finance UK

    Carmakers gear up for Geneva Motor Show amid coronavirus turmoil

    Expect stunning supercars, even as coronavirus concerns linger heavily over the premium auto show.

  • The Man Who Made a Failing Carmaker Beat Mercedes
    Bloomberg

    The Man Who Made a Failing Carmaker Beat Mercedes

    (Bloomberg Opinion) -- The word that Peugeot SA boss Carlos Tavares comes back to time and again to describe the daunting challenges facing the auto industry is a deliberately frightening one. Carmakers face a “Darwinian” period, he reminded investors on Wednesday, implying that some of the French group’s less robust peers won’t survive the epochal shift from combustion to electric vehicles.That battle for survival has just been made even more difficult by the spread of coronavirus, which threatens to shutter plants and sap demand for new vehicles across the industry. The shares of auto companies —  even very profitable ones like Peugeot — have been hammered this week. But if anyone can steer a safe path across this vertiginous chasm, surely Tavares can.For various reasons the big European carmakers have all changed their CEOs recently, but Peugeot has clung to its leader since 2014, and he’ll be in the driving seat when the company merges with Fiat Chrysler Automobiles NV.  The strong full-year results that Tavares unveiled on Wednesday show why his services are in such demand; the contrast with struggling French rival Renault SA is telling. Peugeot’s car operations achieved an 8.5% adjusted operating margin in 2019, whereas Renault managed just 2.6%.(1)While Renault’s net cash is dwindling, forcing it to slash its dividend, Peugeot’s has swelled to more than 10 billion euros ($10.9 billion), allowing it to pay shareholders more.The cost-conscious Tavares has made a virtue of doing more with less and he’s been willing to make unpopular decisions to turn around under-performing businesses. Under General Motors Co.’s ownership, the European carmaker Opel/Vauxhall consistently lost money, but having joined the Peugeot stable it now boasts a 6.5% adjusted operating margin. That’s better than Mercedes-Benz.Wages costs as a percentage of sales have improved — a big achievement considering the workforce is heavily unionized — and Tavares has been ruthless about unlocking cash from inventories and invoices. Reassuringly, he thinks Peugeot could still break even if revenues fell by half.He’s achieved this without neglecting the urgent task of cutting vehicle emissions. Thanks to new electrified products, he’s confident Peugeot will meet the European Union’s tough pollution targets this year and thus avoid regulatory fines.Peugeot isn’t perfect. The company is struggling in inflation-hit Argentina and its performance in China has been poor. But its negligible China market share is an advantage right now. The company has less to lose from coronavirus shockwaves than many peers.What Peugeot lacks in economies of scale — its 3.5 million yearly car sales are one-third of what Volkswagen sells — it makes up for by being more agile. It’s almost a pity that Tavares is about to complicate the “small is beautiful” story by merging with Fiat. Peugeot’s shares have declined by almost 30% since the deal terms (highly favorable to Fiat and its Agnelli family owners) were announced in October.  In fairness, Fiat is also performing well. Together, the two companies generated about 5 billion euros in free cash flow last year and the tie-up should bring substantial cost savings. Yet Peugeot’s shareholders aren’t willing to credit those benefits just yet. Antitrust official might raise objections and history shows there’s plenty else that can go wrong in complicated cross-border mergers.A generation of celebrated auto executives, such as Daimler’s Dieter Zetsche and Renault’s Carlos Ghosn, have departed the stage just as conditions became difficult. (Fiat’s Sergio Marchionne tragically died before he could complete the job). Tavares, who’s 61, isn’t the retiring type. He still has much to prove. (1) Peugeot's profit margins are adjusted for large restructuring costs.To contact the author of this story: Chris Bryant at cbryant32@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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