Paris: Renault SA hinted at a potential reduction in its dividend, after the French carmaker followed up on last week’s profit warning with a cut to the global auto market outlook.

The manufacturer now expects global demand to shrink by 4 per cent this year, compared with a previous forecast for a decline of 3 per cent, Renault said Friday. The company shocked investors last week with a cut to revenue and profitability expectations, as well as saying cash flow might not be positive for the year.

“We will review exactly where we stand in terms of results and cash generation at the end of the year,” interim Chief Executive Officer Clotilde Delbos told analysts. Then we “will convene with the board in order to decide what is the appropriate dividend policy.”

Renault hasn’t cut its dividend since 2011. The shares fell 0.5 per cent in early trading.

Within the past year, Renault has weathered the arrest of former CEO Carlos Ghosn on allegations of financial misconduct, which he denies, laying bare as-yet unresolved tensions with automotive partner Nissan Motor Co. The Japanese manufacturer has since torpedoed a plan for Renault to merge with Fiat Chrysler Automobiles NV. Nissan, where Renault has a 43 per cent stake, is battling its own challenges, including a slide in profits and mass job cuts.

Renault’s profit warning rattled confidence about the carmaker’s grip on operations among a litany of woes. Fresh from a top management shake-up, Renault said it would need to make some choices on spending and review longer-term strategy as markets contract and costs to meet new emissions rules mount.

Sales to Partners

On Friday, Renault blamed poor sales to partners including Nissan and Daimler AG for cutting company targets, and the bulk of a drop in third-quarter revenue. Renault makes the Nissan Micra small car in Renault’s Flins plant near Paris as well as the Nissan Rogue in South Korea.

Renault is currently looking for a new chief executive officer with automotive and international experience, after ousting Thierry Bollore, and appointing Delbos this month.

Fixing the alliance

Renault Chairman Jean-Dominique Senard this week piled on the pressure to mend relations with Nissan that centre around a lopsided shareholding structure that gives the French company an outsize say. Senard is keen to see fixes bear fruit next year, putting a band of new managers on notice as a global downturn in the automotive sector takes hold.

During the third quarter, vehicle deliveries in Europe dropped 3.4 per cent, even as the market rose 2.4 per cent, the company said, blaming a strong year-ago comparison and the new revamped Clio model still in the process of rolling out in the region. Some versions of the new Clio have experienced delays, a spokesman said.

The decline mostly affected the Renault brand, with vehicle sales down 10 per cent. At the low-cost Dacia nameplate, deliveries jumped 9.3 per cent.

In China, the world’s biggest car market where Renault has struggled to grow beyond a limited presence, sales plunged 16 per cent, triple the market decline.

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The troubles at Renault contrast with cross-town rival PSA Group defying the automotive slump with a range of revamped models. PSA managed to lift third-quarter revenue even as unit sales fell slightly.