PARIS ORDERS RENAULT TO MAKE NEW MODELS IN FRANCE
By Ben Hall in Paris
FT
January 13 2010 16:07
The French government has ordered Renault, the country’s second-largest
carmaker, to keep production of its new Clio small car in France
rather than shift it to lower-cost Turkey.
Renault has come under fire from the French government – which holds
a 15 per cent stake – after it emerged the company was considering
making its future Clio IV model at its factory at Bursa in Turkey,
rather than at Flins, near Paris.
EDITOR’S CHOICE In depth: Detroit auto show – Jan-13Scrappage
scheme sends French sales to 20-year high – Dec-29Renault drives
down a new avenue with electric cars – Dec-18Carlos Ghosn, Renault’s
chief executive, and Patrick Pelata, chief operating officer, have
been summoned to the Elysee palace later in the week to explain the
carmaker’s strategy to President Nicolas Sarkozy.
Mr Pelata said on Wednesday no decision had yet been made on where to
produce the Clio IV. He said the Clio would still be made at Flins,
although he did not specify whether this mean the Clio IV or older
versions.
Mr Pelata also said that Renault would cease production of Clios at
Valladolid in Spain and Novo Mesto in Slovenia. That decision could
rekindle concern in the EU that France is inducing the company to
favour French assembly plants over others elsewhere in the bloc in
potential breach of the single market. It is not clear, however,
whether Spain or Slovenia were ever in line to produce the new Clio IV.
The French government’s strong opposition to the production of the
Clio in Turkey is likely to go down badly in Ankara, which is already
fuming at French opposition to Turkish membership of the EU.
Christian Estrosi, industry minister, made clear on Wednesday the
government would not tolerate the so-called delocalising of the
Clio IV which was likely to be sold in large numbers in France when
production started in 2013.
After a meeting with Mr Pelata, Mr Estrosi said: "I made clear to
him that we’re not in favour of producing the Clio IV in Turkey. It
would seem that our message has been understood."
Mr Estrosi said it was "the will of the state that should be respected
in Renault’s future choices".
Mr Estrosi said even if Flins was at full capacity making electric
cars, the Clio IV should be assembled at another, unspecified site
in France.
He said it was the French government’s duty to ensure that French
carmakers – big recipients of state aid last year – maintained or
even increased car production in France.
Renault received ~@3bn in favourable loans from the government last
year, has benefited from France’s ~@600m scrappage scheme, and was set
to see its tax bill cut under a reform of local business levies. It
will also get ~@250m in government aid to produce electric cars and
batteries at its Flins site.
Renault has been criticised by the government and unions for shifting
production of its smaller cars abroad even if these are destined for
the French market. Renault has done so because production of small
cars with small margins is barely profitable in France.
The unions complain that only 25 per cent of Renault units are now
made in France. Mr Pelata said that 55 per cent of production by
added value was still based in Renault’s home market.
The French government’s criticism of Renault’s production plans is
unlikely to serve the interests of other French groups keen to expand
their activities in Turkey.
Years of acrimony over French laws on denial of Armenian genocide
and Mr Sarkozy’s strident opposition to Turkey’s EU bid had already
taken their toll on commercial relations, keeping Gaz de France out
of the Nabucco pipeline consortium (in 2007) and leading some Turks
to avoid French-branded consumer goods.
Spurred by corporate lobbying, Paris had recently been working to
smooth bilateral relations, hosting an official visit by Turkish
president Abdullah Gul in the autumn in which both sides were careful
to avoid awkward public references to Turkey’s European aspirations.
Additional reporting by Delphine Strauss in Ankara
From: Emil Lazarian | Ararat NewsPress
