Renault stock price has pulled back in the past few weeks as concerns about Donald Trump’s trade war have escalated. It retreated to a low of €42 on Friday, down by 22% from its highest point this year. Still, it has held much better than other European rivals like Porsche, BMW, and Volkswagen.
Why Renault is doing better
Donald Trump has roiled the auto industry this year by imposing a 25% general tariff on all vehicles imported to the US. These tariffs also apply to parts, meaning that even local American manufacturers will be impacted.
The levies have hurt most European automakers selling thousands of US vehicles each year. Porsche has been the most affected because it manufactures all its vehicles in Europe, and makes most of its money in the US.
Renault, on the other hand, is more insulated from the current crisis because it has a limited exposure to the US. It sold over 2.26 million vehicles last year, most of which went to European countries like France, Spain, Italy, and the United Kingdom.
The rest of the sales went to markets like Morocco and those in the Latin American region. As such, its business will be insulated from the ongoing trade war. However, the broader slowdown in the automobile industry could have a profound impact.
Renault is in this state because of Luca de Meo, who became CEO and embarked on a path to change the company’s business. He slashed costs and also exited some of its most unprofitable markets.
Growth is continuing
The most recent results showed that Renault’s business was doing well as it reported record profitability. Its annual revenue rose by 7.4% in 2024 to over €56.2 billion, a trend that the management hopes will continue.
Its net income jumped to €2.8 billion, although this was impacted by its Nissan stake. Renault’s free cash flow also jumped to €2.9 billion.
The management believes that it has more room to grow, especially as it increases its presence in the EV industry. It has now become the second-biggest hybrid vehicle company in the region after Volkswagen.
Still, there are a few concerns about the company. First, there are signs that the EV ambitions will be disrupted by Chinese brands like BYD and XPeng that are growing their market share in key countries. These companies will likely become giant names in the European markets over time.
The other issue is that the company is relatively overvalued as it trades at 16x forward sales, higher than other automakers.
Further, it is still in an alliance with Nissan, the embattled Japanese company. Nissan recently terminated a deal to be acquired by Honda Motor.
Renault stock price analysis
Renault share price chart by TradingView
The weekly chart shows that the Renault share price faces another technical risk It has formed a double-top pattern at 52.95 euros, and whose neckline is at 35.77 euros. The stock is now targeting that neckline and is hovering slightly above the ascending trendline that connects the lowest swings since 2022.
Therefore, a move below that trendline will raise the odds of it moving to the key support at 35.77. A drop below that level risks the stock dropping to the 23.6% retracement level at 29 euros, which is about 31% below the current level. The bearish outlook will be invalidated if it rises above the resistance at 52.95 euros.
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