Q1 2017 Renault SA Corporate Sales Call
Apr 27, 2017 AM CEST
RNO.PA - Renault SA
Q1 2017 Renault SA Corporate Sales Call
Apr 27, 2017 / 04:00PM GMT
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Corporate Participants
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* Clotilde Delbos
Renault SA - CFO and EVP
* Thierry Huon
* Thierry Koskas
Renault SA - EVP of Group Sales & Marketing
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Conference Call Participants
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* Charles Winston
Redburn (Europe) Limited, Research Division - Partner of Autos Research
* Fraser Edward Hill
BofA Merrill Lynch, Research Division - Head of Autos Equity Research
* Gaetan Toulemonde
Deutsche Bank AG, Research Division - Research Analyst
* Georges Dieng
Natixis S.A., Research Division - Analyst
* Horst Schneider
HSBC, Research Division - Global Head of Automotive Research and Analyst
* José Maria Asumendi
JP Morgan Chase & Co, Research Division - Head of the European Automotive Team
* Philippe Jean Houchois
Jefferies LLC, Research Division - Equity Analyst
* Thomas Besson
Kepler Cheuvreux, Research Division - Head of Automobile Sector
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Presentation
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Operator [1]
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Ladies and gentlemen, welcome to the Renault Group's First Quarter 2017 Financial Results Conference Call.
Now I hand over to Mr. Thierry Huon. Sir, please go ahead.
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Thierry Huon, [2]
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Good evening, everyone, and welcome to Renault First Quarter 2016 -- 2017 Conference Call, broadcast live and in replay version on our website. The presentation file and press release for this call are all available on our website in the Finance section.
I would like to point out the disclaimer on Slide 2 of this pack, regarding the information contained within this document and in particular, about forward-looking statements. And I invite all participants to read this.
Today's call is scheduled to last about 45 minutes. We have 2 speakers this evening: Thierry Koskas, EVP and Head of Sales and Marketing; and Clotilde Delbos, EVP and CFO. Their presentation will last about 20 minutes and will be followed by a Q&A session. If we don't have the time to take everyone's questions in this session, the IR team will be around to take your calls later.
Without further ado, I will pass the call over to Clotilde for a few opening remarks. Clotilde?
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Clotilde Delbos, Renault SA - CFO and EVP [3]
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Thank you, Thierry, and good evening, everybody. Before reviewing Q1 commercial results with Thierry Koskas in a minute, I would like to highlight the key takeaways from the first quarter. First, as you have noticed, we present our numbers for the first time, including AVTOVAZ. Secondly, we booked record performance in terms of volumes and revenues in the quarter as our businesses were strong in all regions. This was true for Europe, which benefited from a stronger market than anticipated. This environment, combined with the impact of our new models and better cars availability, allowed us to outperform the market. While we are very pleased with this strong start, we have to stay vigilant, especially on the potential risks surrounding the European market, uncertainties in U.K., diesel decline and channel mix deterioration in some countries. However, we still expect the European and French markets to grow 2% in 2017. Thirdly, emerging markets did better than initially expected. Indeed, we are seeing the first positive signs in Russia and Brazil. And even if it is too early to call it a recovery, this is encouraging after several years of decline. Consequently, we have raised our forecast for the Russian market that we see now potentially growing this year up to 5% versus our initial target for a stable market. Lastly, the ForEx impact turned out to be positive -- more positive than our expectation, and I will comment it in more details in a minute.
Despite headwinds from raw materials and the uncertainties already mentioned, I can confirm with confidence our full year 2017 guidelines.
Having made these preliminary remarks, I will now pass over the call to Thierry, who will review our commercial performance in the first quarter.
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Thierry Koskas, Renault SA - EVP of Group Sales & Marketing [4]
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Thank you, Clotilde. Good evening, everyone. I will begin by commenting the evolution of the markets in the world in the first quarter. Globally, worldwide, TIV grew by 4% in Q1. If we see the detail per region, Europe TIV remains well oriented with plus 8%, with most countries showing positive evolution. And I would like to highlight U.K. TIV, plus 5.4%. In Eurasia, there is good news from Russia, where it appears that the latest trend is positive. On the other hand, Turkey is down by 7%. Similarly in America, although year-to-date TIV slightly down in Brazil, the trend for March is positive and Argentina is booming.
In Africa, Middle East, India region, we enjoy a good trend in our main countries such as India, Iran or Morocco. Algeria is still down due to local context of quota. And finally, Asian markets remain well oriented, both in China and Korea.
Let's now look at our sales results. In Q1, Renault Group sold 874,000 units worldwide. This figure includes all our brands, Renault, Dacia, Renault Samsung Motors and Lada. This volume represents a growth of 15.8%, obviously compared to the same parameter as last year, i.e., including Lada as well. In all regions, Renault outpaced its TIV evolution, which means our sales performance continued to improve everywhere. And as a result, our worldwide market share reaches 3.8%, which is 0.4 points above last year.
Let's now move to the detail per country and region. First comment I would like to make is that the weight of our sales in -- outside Europe is increasing, which is a sign of our geographical expansion. Excluding Lada, Europe accounted in Q1 for 59% of the sales, which is 4 points below Q1 last year.
In terms of key markets for the group, obviously, some European markets remain in the top 10, but it's worth mentioning that some major international markets now appear in the top 10 or grow significantly in the ranking. That's the case for Russia, Iran, India and Brazil.
Let's now have a look at the detail per region. In each slide, you will see the volume evolution broken down into TIV effect and performance effect, then the market share evolution and some specific highlights. So let's start with Europe. As you can see, our group continues to gain market share, concretely, 0.2, thanks to the success of our renewed lineup on the C and D segment, as well as sustainable performance on our existing lineup and models like Clio, Captur or Kadjar.
I would like to highlight our good performance in Germany, where we gained almost 1 point market share. Also, both Renault and Dacia sales performance improved. Our portfolio remains very strong at same level, comparable level, as last year.
Let's now move to Eurasia region. In Eurasia, all the brands contributed to our sales performance and growth in volume. We gained overall 1.5 points market share, and I would like to highlight our performance in our 2 main countries. First of all, in Turkey, where we reached an outstanding 19% market share, thanks particularly to the success of Mégane Sedan. In Russia, we gained 2-point market share. This gain is equally shared between Renault brand, thanks to the success of Captur that we launched last year, and to Lada, thanks to the fresh lineup, especially Vesta and X-Ray models.
Let's now move to AMI region. So in Africa, Middle East and India, the strong pace continues and our overall sales performance improved, with plus 1.4 market share. In India, our growth is in line with the market, which is what we expected, as last year in Q1, we delivered a huge portfolio we had built with Kwid after the launch of this model.
In Iran, we enjoy full effect of Sandero, launched last year, and we more than doubled our market share. I would like also to highlight our performance in Maghreb country. In Morocco, in a booming market, we gained 4 points market share. And in Algeria, in a still low market due to quota, over 1 car out of 2 sold in the country comes from Renault and Dacia.
Let's now move to America. In America region, we -- our group gains 0.5 points market share, with strong performance in Argentina and in Colombia. Our volumes also benefit from strong TIV growth in Argentina. The slight decrease of market share in Brazil is expected and explained by the transition period between Clio sales, which was discontinued at the end of last year, and Kwid that will be available in second part of the year. So performance will now move up, thanks to the launch of Captur that has just been made. And as I said, the launch of Kwid in a few weeks.
Let's now finish this regional review with Asia. In Asia, our sales doubled in the first quarter. This is thanks first to China, where sales are now on the right track, thanks to the success of Koleos and sales improvement of Kadjar. Sales now reached a satisfactory 6,000 units per month. In Korea, RSM sales performance improved sharply, with plus 2 points market share. In addition to continued performance of SM6, the launch of QM6, the sister car of Koleos, has been hugely successful and explains the strong performance.
And I will conclude the commercial review with a focus on electric cars. As you know, we recently launched ZOE Z.E.40 with the range doubled compared to the previous version, 400 kilometer in NEDC cycle and 300 kilometer in most real-life usage. ZOE Z.E.40 is a unique offer on the market. It alleviates any range anxiety. As a result, Renault leadership in electric vehicle is strengthening. And if we look at the ZOE order take, it almost doubled versus last year, so we can say that EV is now taking off.
I will now hand over to Clotilde Delbos.
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Clotilde Delbos, Renault SA - CFO and EVP [5]
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Thank you, Thierry. I will start this part of the presentation with the variance analysis in first quarter revenues compared to last year on Slide 16. As you can see, group revenues were up by 25.2% in the quarter at EUR 13,129,000,000. Of course, this is partly due -- partly the result of vast consolidation, but even excluding this impact, our revenues were still up 19.7%.
The Automotive division, excluding VAZ, was the main driver behind the strong performance, with an increase of 20.1% in revenues. RCI revenues increased 13.5%, reflecting the positive volume development and less adverse impact from interest rates that are starting to stabilize. In addition, foreign exchange is now becoming a slight tailwind and I will comment RCI more in details later in my presentation.
I will start the analysis with a review of the Automotive division on Slide 17. On this slide, we show the contribution to the change in Automotive revenues, excluding AVTOVAZ, for the first quarter broken down by item. Reading from the left-hand side of the slide. The first item is volume. Thierry just showed you that global registrations without Lada increased by 16.6% in the quarter. As you can see on the slide, the volume impact is 9.2 points. As usual, this gap between registration growth and volume impact came from the CKD business, activities outside new car sales and the slight negative impact from inventory changes.
Next, the geographic mix is almost neutral, as growth rates from business in Europe and outside Europe, excluding CKD, were relatively close. The product mix was slightly positive, thanks to the positive impact of our C and D segment products and despite the strong performance of Dacia in Europe. The price effect was positive by 2.4 points. This impact is no more resulting from the price action taken in -- -- sorry, is no more, mainly resulting from the price action taken in emerging markets to offset the negative ForEx impact, but mostly the reflection of price increases coming with our product renewals to cover the enrichment.
Sales to partner contributed positively by 3.5 points and reflect the increase in CKD volume and LCVs for partners, but also from the start of Micra production in France.
The next item is foreign exchange, which impacted positively by 1.3 points. Despite headwinds from the British pound and the Turkish lira, the strength of the Brazilian real and Russian ruble turned this item into a tailwind.
The last item, others, represent the activities outside the new car business, mainly spare parts, non-new car sales as well as restatement related to buyback commitments. It shows a positive contribution of 3.2 points stemming from good level of activity from group dealers, used car and spare parts. This item also benefited from some minor changes in the scope of consolidation.
If you turn to Slide 18 on distribution stock, you will see the usual seasonal Q1 effect, with an increasing inventories that reached 670,000 units versus 593,000 units a year ago. Inventories are up 77,000 units to keep up with market demand. In terms of number of days on hand, we stood at 78 days like a year ago and we are comfortable with this level that allows us to fully participate in the market growth.
I will now move on to Slide 19 and comment RCI's commercial performance. The number of new contracts written by RCI Banque in the first quarter increased by 21.4% versus the same period in 2016, thanks to strong sales momentum, higher penetration rate on new cars and growing used car activity. New financing increased slightly faster than the number of new contracts at plus 22.7% at EUR 5 billion.
Before moving on to the Q&A session, I will turn to the last slide, #20, which shows you our outlook for 2017. As I mentioned in my preliminary remarks, markets have been better than expected in the first quarter and we performed well. On the negative side, we still expect significant headwinds from raw material prices and we have uncertainties regarding the U.K. markets and diesel demand. Within this context, we confirm our guidance for the full year 2017. And that concludes our presentation. Together with Thierry, we are now ready to take your questions.
And I will now hand the call back to the conference operator, and thank you for your attention.
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Questions and Answers
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Operator [1]
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(Operator Instructions) And we have the first question from Thomas Besson from Kepler Cheuvreux.
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Thomas Besson, Kepler Cheuvreux, Research Division - Head of Automobile Sector [2]
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I have 2 questions for you. I'll start with your outlook for Russia and I would like you to say just a quick word to see if we have a chance to see margin for AVTOVAZ get closer to 0-plus earlier, both given this better market and given the stronger share gains for AVTOVAZ? And the second question, to come back to your comment on pricing, which is no more mainly emerging market consequence. Could you tell us whether we can expect this price effect to be sustained in coming quarters, improving (inaudible) or whether we have seen the best level this year?
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Thierry Koskas, Renault SA - EVP of Group Sales & Marketing [3]
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So on the -- just a few comments on the Russian markets. It is true that we have reviewed the forecast for various reasons. First of all, the macroeconomic context is much better, with inflation going down, ruble strengthening, interest rate have been recently reduced. And also, the government is still supporting the automotive market with some incentive. All these reasons make us think that the market will move up and that's what we have seen in the last trend, especially the month of -- in March. And I will now hand to Clotilde for the rest of the question.
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Clotilde Delbos, Renault SA - CFO and EVP [4]
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Yes, on the VAZ, obviously, VAZ reported stronger-than-expected Q1 results and it's true that the -- there is an improvement on their operating margin. This is due to the market, but also to all the efforts that we are doing in VAZ. And clearly, this is obviously encouraging results. Even though we need to mention that the improvement versus Q1 last year is due to the absence of the one-off we had in Q1 last year. But that doesn't take away the fact that the results are closer to breakeven. So it does make us confident that VAZ will further reduce their losses in 2017. It puts VAZ in a very good footing to reach positive operating margin in 2018 as targeted, but it is clearly too early to say that this could happen as soon as '17, as we still see some potential risk, mostly from raw material prices and the market, even though we have a more comfortable outlook, up to 5, it's still between 0 and 5. So we still need to deliver also on the market. Clearly, it's encouraging, but too early to say that we could turn positive as soon as '17, in my view.
On the other question, which was referring to pricing. So clearly, in Q1, we still had some effect, carryover effect, I would say, of positive impact of price increase in some emerging countries, notably South America, coming from the price offset that we posted last year to offset FX. So we still have some. And this should diminish throughout the year as FX is starting to improve and we can see that already in our turnover. Now that doesn't change our policy in terms of pricing, where we want to be very above market in most countries in terms of TPVA, as we have started to do and we told you that in several occasions. And as we make sure that we price as much as we can the enrichment that we put in the car, for sure what we put in the car, which is not linked to regulation, there is clear guidelines to do so. And when it comes to regulation, we also have the intent to price as much as we can. If I, for example, take the example of the Euro 6 for LCV, we are pricing as much as we can of this new regulation impact. So the strategy on pricing does not change, but you will see indeed a reduction in the carryover we had on FX that we had fully last year, and we still have on Q1.
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Operator [5]
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So we have another question from Fraser Hill from Bank of America.
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Fraser Edward Hill, BofA Merrill Lynch, Research Division - Head of Autos Equity Research [6]
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I've got 2 questions. I wondered if you could elaborate on your comments about raw material prices and diesel, separately? Obviously, you identified those as risks. Perhaps if your guidance hasn't changed, just remind us what you're saying about the expected impact on raw materials for 2017 this year and how has that changed since we last heard from you at the full year results? And in terms of diesel, how does that impact you? I mean, is it as greatly -- is it the impact on your CO2 footprint and you'll need to invest to try and bring that down? Or it is more the profitability of diesel vehicles, that you're losing out on having to shift the mix more to gasoline?
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Clotilde Delbos, Renault SA - CFO and EVP [7]
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Thanks for the question. First, let me remind you that this is a revenue call. So I'm not going to go into detail of the impact on profit on any of these items. But nevertheless, on raw material, we have announced, you're right, in February that this will be a significant adverse impact versus 2016 on our results growth before any offset in the prices. And I confirm that what we had in mind at the time of February has not changed. We do see an increase in commodity price, and we do see an increase in steel. So there is no change versus what I told you in February. And there is no change also in our intent to try to pass through as much as we can this raw material increase in the prices in order to mitigate to the extent possible the impact on our bottom line. So that's for raw material.
For diesel. Again, it's a revenue call, but some elements. First, it's no different for Renault than it is for the rest of the market, because it's a question of market demand above anything else. So we have seen a slight decrease in retail in diesel in Europe, not yet in fleets. And on the contrary, we have seen an increase in the demand for our cars in diesel in the other countries outside of Europe. So clearly, there is uncertainty because we don't know, we hear, we read a lot of things, but if I look at actual today, there is an actual decrease in demand impacting our top line in diesel in Europe. But again, it is offset by other countries. So for now, there is no major impact of diesel on our books for the Q1. But I think it is fair to say that we have some questions about the speed at which those movements will take over the rest of the 3 quarters. And it is also a question of how much this decrease in diesel is going to be phased, in order to make sure that we have the right offset with, for example, EV in order to make sure that we reach our CO2 commitments in the coming years. And so we do see that as a context that we are preparing to, especially with our sales of EV, which is in my view a very good counterparty to whatever can happen on diesel.
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Operator [8]
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So we have another question from Charles Winston from Redburn Partners.
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Charles Winston, Redburn (Europe) Limited, Research Division - Partner of Autos Research [9]
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It's Charles from Redburn. Thanks for taking my 2 questions. First, just on the ZOE and you're talking about on the EV side there, the step-up in the order book you've seen, can you just give us some sort of remind or commentary about the capacity there? In other words, with such a sudden step-up, your ability to produce both the vehicles, but also, you also have to source the batteries. Does that become an issue at any point soon? Or are you way below any sort of headroom issues on that vehicle? And my second question, I'm so sorry to do this because I do know it's a revenue call, but last year, with the very good revenues, we did run into this issue of the heat in the system, this issue of monozukuri not being quite as good as perhaps people had thought because of the pressures that were being put into the business from this very good sales number. Are we seeing anything similar on that this year? Or are you ready for this growth, for example, the heat in the system issues that we saw last year won't be visible this year? As I said, I'm sorry about that, but it is quite critical, obviously, for the outlook.
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Thierry Koskas, Renault SA - EVP of Group Sales & Marketing [10]
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If I can just answer on the ZOE. Last year, we sold around a bit more than 20,000 ZOE. So you see if we follow the order trend, we could sell or you see double this year. And we have planned the capacity -- the capacities accordingly, both on the battery side and also on the engine, which is, as you know, made internally. So we have -- that's where we see very good surprise that the sales are so well orientated, but we have planned the capacity, we have the capacity to fulfill the customer demand.
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Clotilde Delbos, Renault SA - CFO and EVP [11]
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Yes, on the monozukuri, clearly, you have seen that the growth of the market is higher than expected, but it is, I would say we have been caught less in surprise, by surprise, than we were last year. So we don't see as much overheating that what we saw last year same period or throughout the whole year in order to be able to fulfill the demand. So it's -- there has no common things with what we saw last year. So there is no reason for me to say anything different than what I told you in February in terms of monozukuri. Last year was low compared to what we had done in previous year. We said we would improve our monozukuri situation this year and I can confirm that we will do so.
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Operator [12]
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So we have another question from Gaetan Toulemonde from Deutsche Bank.
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Gaetan Toulemonde, Deutsche Bank AG, Research Division - Research Analyst [13]
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Two quick one. The first one, EUR 350 million sales to partner in the first quarter, can you give us an idea how it's going to look like for the full year? Can we multiply that number by 4 to get an idea or it's a different number? Can you be a little bit more specific?
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Clotilde Delbos, Renault SA - CFO and EVP [14]
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Okay, Gaetan, thank you for the question. Clearly, it's a big number for Q1. This is in part due, obviously, to Micra, which started this year. We also had very good business in Iran and China versus the same quarter last year. But this is not -- you can't multiply by 4, clearly, because the comparable, if I take Iran and China, is clearly going to improve throughout the year. So you won't have the same increase in the coming quarters on those 2 countries. Also, diesel powertrain sales to our partners might be a little more sluggish. It has not yet been the case, but it might, again, referring to the elements I mentioned before, it's a little unknown. So you might have some adverse impact on that one. And on Rogue, it was very strong last year, it's not a given either that it's going to be at the same level, as our export to the U.S. have started to slow down as expected. So no, as a clear answer, I don't think you can multiply by 4 this impact for the full year.
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Gaetan Toulemonde, Deutsche Bank AG, Research Division - Research Analyst [15]
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Okay. Second question is on pricing. Do I read it properly that there is -- there are price increase in Europe, which is pretty new for the last few years?
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Thierry Koskas, Renault SA - EVP of Group Sales & Marketing [16]
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Yes, on pricing, our policy is really to maintain the price positioning that we have reached. Thanks to the renewal of the lineup, we are above the market average, 1 point above the market average. And the objective is to maintain this price positioning. Obviously, this means in some markets, some price increase according to what's the competition is doing, and that's, for example, the case in the U.K., where we have followed the market trend since the month of July 2016, increasing prices of Renault by 4.5%, in line with the market. But our global policy, especially in Europe, is to maintain our price positioning that we have reached, thanks to the lineup renewal.
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Operator [17]
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So we have another question from José Asumendi from JPMorgan.
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José Maria Asumendi, JP Morgan Chase & Co, Research Division - Head of the European Automotive Team [18]
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A couple of questions, it's José. Thierry, can you talk a little bit about April, at least for Russia and for Brazil. How are you seeing both markets? Can you confirm there is an acceleration versus March, I'm particularly interested in the Brazilian market, whether we've seen that acceleration? And second, Clotilde, can you speak a little bit about pricing and just help us understand a bit the, how much was pricing related to say for the offset currency headwinds and how much is it really related to product? Can we call it, let's say, 1/3 FX-related and 2/3 product-driven?
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Thierry Koskas, Renault SA - EVP of Group Sales & Marketing [19]
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Okay, on markets in Brazil and Russia, we obviously check the daily trend. What we can see in both countries according to the information that we have is the daily trend remains well oriented and higher than March. Let's just be careful on the monthly TIV, as there is number of working days that is different. We had in March one more working day than last year. In April, I think it's one less, so there might be an impact on the percentage, but the key factor for us is the daily average sales. And this is well oriented in both markets.
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Clotilde Delbos, Renault SA - CFO and EVP [20]
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On the second question, well, I'm not going to give you a very precise number, but I think your assumption is not far from reality. I think you can -- for modeling purposes, you can use this type of assumption on the split between pricing for offset of FX carryover and for the impact of our own actions and product.
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José Maria Asumendi, JP Morgan Chase & Co, Research Division - Head of the European Automotive Team [21]
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So that would, in excess, offset the incremental enrichment you're putting on the car?
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Clotilde Delbos, Renault SA - CFO and EVP [22]
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This is more for the revenue and -- sorry, it's not a question for a revenue call. So I'm not going to comment on that one at this stage.
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Operator [23]
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So we have another question from Horst Schneider from HSBC.
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Horst Schneider, HSBC, Research Division - Global Head of Automotive Research and Analyst [24]
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The first one would be I would be interested to get more detail on this great impact that you show on the others line. You talked in your presentation about some slight change in the scope of consolidation. Maybe you can split it up a little bit, what has driven this others line and is this line is going to remain that strong also in the next few quarters? Then coming back on your statements on pricing. I want to know, when you say now that the currencies in emerging markets, they have stabilized and have strengthened, if we should see there, in the course of the year, maybe some negative price impact in emerging markets, because you need to reflect this strength in the currency also in your pricing in the market?
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Clotilde Delbos, Renault SA - CFO and EVP [25]
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Okay, on the other turnover, while it's mostly -- the good result is really mostly linked to the good performance of our dealer business and the good performance in spare parts. The consolidation impact mostly relates to Formula One, but it's not a major portion of that. So you really have to take into account more the good business we have in dealers and in spare parts. Obviously, this good business should continue, maybe not though to the same extent in my view, it's a little tougher to foresee. So don't expect such a big impact in the coming quarters.
In terms of pricing change...
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Thierry Koskas, Renault SA - EVP of Group Sales & Marketing [26]
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So just to comment that in the countries where we have stronger FX, at the moment, we did not have any price decrease. I mean, we are -- prices are either stable or increasing. What you see for the future, it will depend what the competition will do. We'll have to monitor that very carefully, but at the moment, no price decrease in these markets.
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Operator [27]
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So we have another question from Georges Dieng from Natixis.
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Georges Dieng, Natixis S.A., Research Division - Analyst [28]
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It's Georges Dieng from Natixis. I have 2 questions. The first question on the product mix. I was wondering if the impact, which was relatively subdued in Q1, will remain more or less at the same level? Or is there a possibility that it could improve in the coming quarters, supported by the C and D segment, the first question. Second is related to AVTOVAZ. I don't know if you could maybe comment on AVTOVAZ revenue performance in local currencies and the elimination was actually -- of course, we didn't have any, let's say, prior information, but eliminations looked quite high. So I was wondering if this is supposed to be the quarterly run rate, as a good guide for, let's say, the full year? And what will drive, really, eliminations going forward?
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Clotilde Delbos, Renault SA - CFO and EVP [29]
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Well, those are not easy questions. Firstly, the product piece, we don't usually look at it that way, to be honest. It's quite difficult to give you a forecast of the evolution of the product mix. Well, there is no reason why it would drastically be negative, but it really depends on so many success of so many cars in so many countries. It really depends, if Dacia continues to be extremely strong, it's going to be a negative. If Kwid starts be strong, very strong again, it's going to be a negative. CD can be a positive. So it's really too complicated in order to give you a forecast for this box. VAZ, I don't know what much more to tell you in terms of result in local currency. Clearly, on the turnover front, they did benefit from higher volume and efforts on the impact of their new models, which have an impact on the price they sell and on their profitability, or I mean, at least on the turnover per unit. So there is not much more to say on VAZ to be honest. And on elimination -- sorry, go ahead.
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Georges Dieng, Natixis S.A., Research Division - Analyst [30]
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I mean, obviously when we look at VAZ revenues, there is a step change, I think, which started basically in Q4 '16, so...
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Clotilde Delbos, Renault SA - CFO and EVP [31]
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That's a new product.
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Georges Dieng, Natixis S.A., Research Division - Analyst [32]
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(inaudible) in that case. So this has really been driven by the Vesta, the X-Ray that you had mentioned, et cetera?
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Clotilde Delbos, Renault SA - CFO and EVP [33]
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Yes, I confirm that. It's really linked to the good volume. First, the volume of the market, that's the volume box, and on the mix and the increasing prices, is clearly due to the success of -- maybe Thierry, you can say a word on the success, the commercial success first of their cars.
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Thierry Koskas, Renault SA - EVP of Group Sales & Marketing [34]
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Yes, absolutely. So we recently launched 2 -- Lada launched 2 new models recently, the Vesta and the X-Ray. Both are meeting huge success, especially the Vesta, that enables not only to help the sales, but also to renew and to help the brand with very modern and very modern and very surprising design. So both models are very well perceived and the Vesta being one of the key leaders in the Russian market.
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Clotilde Delbos, Renault SA - CFO and EVP [35]
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And on the elimination, it's very difficult to say, there is to me, I mean, there is no exceptional I would say in this line. So for modeling purposes, same thing, you can, if you want -- difficult to give you a guide, but if you want to take that every quarter, why not, and we'll see after H2 -- at the end of H1, sorry, if this is realized or not.
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Georges Dieng, Natixis S.A., Research Division - Analyst [36]
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Because, just to make sure that I got it right, when I look at, for instance, the registration document when you mentioned the relationship with AVTOVAZ, so what you basically eliminate is, because they are, I would say, both invoices from AVTOVAZ, Renault and vice versa. But when I look at the figures taken separately, we're talking about EUR 400 million on the one hand and EUR 340 million on the other. That's why I was not very sure of what would be the right number there. Does it mean that basically what you're doing, I mean, reciprocally, is basically gaining momentum as well?
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Clotilde Delbos, Renault SA - CFO and EVP [37]
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It's difficult to say because there are, it's both ways. I mean, we're selling parts to AVTOVAZ. They're selling some of our cars back to us. So it really depend on the balance of the two. So that's why it's so difficult to make, make the link between what you can read in the registration document and the actual elimination.
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Operator [38]
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So we have our last question from Mr. Philippe Houchois from Jefferies.
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Philippe Jean Houchois, Jefferies LLC, Research Division - Equity Analyst [39]
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Most of my questions have been answered. A quick question on the very strong revenue and asset performance from RCI. This is all organic, there is no impact of any consolidation related to AVTOVAZ, is that the case?
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Clotilde Delbos, Renault SA - CFO and EVP [40]
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No, it's all organic. Maybe to one exception, because we have started the consolidation of Colombia, but I think it's quite minimal in the books of RCI, it's a small thing. So, no, the answer is it's completely organic, maybe to that very small exception to be precise, but in my view, it's very minimal.
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Philippe Jean Houchois, Jefferies LLC, Research Division - Equity Analyst [41]
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Okay. So all very strong here. Just a little detail, not to be picky, but there is a slight change in your inventory number from Q1 last year. I'm assuming that 18,000 is about the inventory for AVTOVAZ?
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Clotilde Delbos, Renault SA - CFO and EVP [42]
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Sorry, just maybe a small precision on RCI. I mean, the strong growth is also linked to, last year, we had negative impact from low interest rates, which have now stabilized. So you don't have this negative, and we have a tailwind in FX, whereas we had a headwind in FX last year and that's for -- sorry, RCI. Could you then repeat the question on VAZ, because I did not hear it?
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Philippe Jean Houchois, Jefferies LLC, Research Division - Equity Analyst [43]
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Yes, the other thing is just briefly on the -- the independent dealer number that you reported last year was 237,000 units, now it's 298,000. So -- and the number of days of sales has changed slightly. So I'm assuming that's an impact of consolidation of AVTOVAZ, is that correct?
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Clotilde Delbos, Renault SA - CFO and EVP [44]
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I think it's a pro forma, it has been restricted, but it's not linked to AVTOVAZ. I think if you need further information, we'll see with the team, but I don't have that in top of my mind.
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Thierry Huon, [45]
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There is no more questions?
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Operator [46]
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No more questions, sir.
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Thierry Huon, [47]
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Okay. So thank you, everyone, for being on this call. And the IR team is available if you have any further questions. Have a good evening. Goodbye.
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Operator [48]
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Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.
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