Barclays downgraded Renault to Equal Weight from Overweight, citing intensifying competition in the European auto sector and questioning the feasibility of the company’s cost-reduction targets. The bank maintained its €31.5 price target but reduced adjusted EBIT estimates for 2026-2028 by 3-6% following Renault’s first-half results.
Renault shares fell 1.6% in early Paris trading after the downgrade. The stock has risen 15% since June lows, outperforming the broader SXAP auto index by five percentage points during the same period. Barclays does not expect Renault to meet the lower end of its full-year EBIT margin guidance of 5.3-5.7%, with the first-half margin recorded at 5.2%.
The bank highlighted Renault’s ambitious savings plan, targeting roughly €400 per vehicle annually through 2028, equating to about €1 billion in annual cost reductions. However, Barclays analysts stated the required savings trajectory appears unattainable, noting that the purchasing bucket would need to quadruple to around €900 million in the second half from €170 million in the first half. Renault’s CEO François Provost has emphasized urgency, but Barclays described the magnitude of the required savings as "very large."
Regional performance showed mixed trends. Renault reported a 7.2% year-over-year increase in July volumes in the EU5 region, but its largest non-European market, Turkey, saw a 21% decline in July after strong earlier performance. The company’s Dacia brand sales dropped 8.1% in the first half, worse than its original target of flat volumes, and Barclays expects a full-year decline. Renault also faces competitive pressure from rivals such as Volkswagen, which Barclays prefers within the sector.
