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Thread: Back in the Race

  1. #1
    1000+ Posts gerry freed's Avatar
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    Default Back in the Race

    When PSA hit deep trouble, its shares were removed from the CAC40, the French Stock Market Index based on the top 40 companies.
    Last week, they were reinstated. The shares are now over 16 euros and some financial analysts are making positive noises for the year to come.

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  2. #2
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    Renault May Take Russia Wheel From General Motors -- Heard on the Street

    By Thao Hua

    Fatigue is setting in for car makers in Russia.

    General Motors Co. this week decided to close its St. Petersburg plant and stop selling most locally manufactured Opel and GM cars. While Russia only accounted for about 2% of total sales last year, the country's growth potential meant GM had pledged a $1 billion investment to increase capacity there only three years ago.

    Low oil prices combined with economic sanctions, higher interest rates and a falling ruble are pummeling the Russian car industry. In 2014, the number of total vehicle registrations fell by 10.5% and is expected to drop by another 36% this year, according to IHS.

    But for those with stamina, GM'S about-face could leave them with a bigger piece of the pie when the auto sector eventually recovers. Russia is still seen as a source of longer-term growth, thanks to a burgeoning middle class and relatively low car ownership compared with developed markets.

    One potential beneficiary could be Renault, which has been among the most aggressive foreign auto manufacturers to grab market share. It has a joint venture with Russian auto maker Avtovaz . Despite losses of EUR182 million ($194 million) from the venture in 2014, Renault has reiterated plans to increase production and market share in Russia.

    The hope is that Renault can grow through the downturn. The expected weakness of the euro against the dollar should give it an edge in cutting prices, compared with U.S. rivals. Its tie-up with a local partner is another advantage, although it would also make it more difficult and costly for Renault to extricate itself if required.

    The worry is that any turnaround in Russia's car market looks increasingly distant. For a sales recovery to be sustainable, two key things need to happen: Oil prices must stabilize and geopolitical sanctions must ease. Neither looks likely.

    If the recovery takes too long, the infrastructure supporting car manufacturers may begin to deteriorate. GM was one of the oldest and biggest investors in the Russian auto industry, and its decision to cut loose may mean others including car parts suppliers do the same. This could hamper auto makers' ability to meet regulatory targets for localized manufacturing.

    When Russia's auto industry eventually emerges from the doldrums, there could be opportunities for those who have stayed the course. But, for now, long-distance driving in the country is becoming more arduous.
    .....

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