Accounting analysis and valuation methods of Renault
The year 2008 is a year of risk for the automotive sector with a macroeconomic environment that is deteriorating gradually. In Europe, the sales were facilitated by the new EU member and a base effect in Germany on assumptions of modest growth in Europe. It was accompanied by the risk of spreading a possible recession in the U.S. economy. We presented a hypothesis of auto sales in 2008 instead of an initial forecast of 2% growth.
After rising to 0.2% in 2007 (+1.1% including the new members of the European Union), we expected a decline of 1.4% in Western Europe and -0.9% with the new members. This prediction was consistent with economic growth revised gradually by SG Economic research from 1.6% to 1.3% for the euro area and by 2.2% to 1.7% for the United Kingdom. Among the technical, fiscal measures to promote cleaner vehicles in France, Spain, and Italy, it also provided support to the demand for small cars and, ultimately, to the European market as a whole.
In France, demand took advantage of the small and scrapping rating system introduced by the government. Growth was estimated at only 1.5%, so that it could reflect the economic environment. A risk factor on the prediction was the surprise increase of 20% of registrations in December 2007, in anticipation of penalties imposed on certain types of vehicles and which affected the figures in January, while the comparison was negative in the month of December.
We expected, however, a decline of more than 6% in Spain and 5% in the UK. Although the final months of 2007 did not show any marked reversals it was still a huge risk because of lower property prices and deterioration related to consumer confidence. Changes in interest rates in the UK, however, were a positive factor if a drop occurred. We also expected a further growth (+6.5%) of the newly members of the European Union through the development of the rate of car ownership.
Even if there was propagation of a global crisis in these countries, we believe that the movement initiated by the inevitable development of trade relations with major countries and the progressive enrichment of the population would support long-term demand. In addition, the expected increase for 2009 and 2010 was 0.9%and 1.7% for Western Europe by building on a return to higher economic growth.
Our forecasts were based on the downward revision of growth in 2008 by SG Economic Research from 2.6% to 1.2%, with a high level of risk, particularly on consumption, because of the housing crisis. We retain the assumption of a market down of 5.9%, to 15.2 million units instead of a 3% decline earlier. It was located at the bottom of the estimation of Nissan (15.5 million units to 16 million) and the figures announced by U.S. automakers and Toyota relied on sales that were slightly down around 15.8 million units, against16.2 million in 2007 with a decrease in S1 followed by a rebound at the end of the year.
Tags: Automotive sector, macroeconomic environment, European market, rating system, economic environment, lower property prices, global crisis.
«Introduction. Financial market. DeÂ...nition. Financial assets. The financial risk. The financial risk feature. Type of financial risk. Risk and volatility. The risk measurement. The risk premium. The market risk premium. Methods proposed for calculating the market risk premium. The market risk...»
«The general increase in volatility of the ...nancial markets can be partly explained by the growing uncertainly of the economic environment. It is, on the other hand, a reflection of the growing efficiency and integration of the financial markets allow the almostinstantaneous move of capital from...»
«Literature review. The corporate brand. The growth necessity. Managing corporate brand and external growth. The impact of external growth on corporate brand equity. Methodology. Research Aim. Research objectives. Industrial and theoretical background. Methodology. Cases selection. Findings. CASE 1:...»
«The deregulation and the overcapacity of many industries have led to a record level in external growth operations in the late 1990s (Doyle 2000). Nevertheless, development by acquisition tends to be selective in terms of industry sectors. In banking, insurance, pharmaceutical, airline and...»
«Introduction. Presentation of the company. Context of the analysis. Short economic analysis. Financial structure analysis. Trend analysis. Comparative analysis. Financial cash flows. Assessment of the risks. Conclusion and recommendations.»
«Microsoft, a global company in the informatics system, was founded in 1975 by two American students, Bill Gates and Paul Allen. Microsoft hires almost 80000 people in more than 100 countries. Its most important activity is to develop informatics system for computers with revenues worth 70 billion...»