Renault seen to drive more imported models into China

RENAULT Corp will continue to introduce more cars in China as complete-built imported units in the following years rather than localizing production in a bid to double its profitability worldwide by 2009.

The French car maker unveiled a sporty version of Megane Coupe-Cabriolet in Shanghai on Friday that will cost 381,650 yuan (US$50,887). It will also start selling its latest generation of the Laguna model in China in the summer of next year to compete with rivals like Audi A4 and BMW 3 Series.

Being a latecomer to the Chinese market, Renault still is cautious towards localizing production as it is the only car maker among the top nine global auto giants which has not set up any plant in China to make passenger cars. Rather, it depends on expanding its lineup through imports.

"There is no precise plan today to make Renault's cars locally in China. We are thinking about the opportunity but we have not got any precise date (for a plant)," said Thierry Koskas, vice president of Renault Asia-Africa.

Renault plans to sell 3.3 million cars and increase its profitability to six percent by 2009 worldwide, fueled by emerging markets like India and Iran, where Renault has already invested heavily since last year.

However, China, the world's second largest auto market, seems not to be a top priority in the car maker's ambitious plan although Koskas admitted local production would be helpful to realize the target for the Asian and African regions.

This is because Renault is not price competitive in China as its imported models sell for more due to higher production costs in Europe and foreign currency fluctuations against rivals like General Motors, Volkswagen and Japanese car makers.

In the Asian and African regions, Renault sold 150,000 units for the first nine months this year, including 2,000 units delivered on China's mainland.

"Every car we sell we make is profitable and the Asia and Africa regions contribute to the profitability target," Koskas said. "But we can't do everything at the same time. After 2009, future growth perhaps will not be from Iran and India, but another country."

Renault and China's Dongfeng Motors had signed a preliminary agreement in 2004 to build 300,000 cars a year in southern China. But the plan was postponed as the two partners could not agree on a site for the plant.

The six percent profitability target by 2009 was part of Renault's global revival plan after it posted a sales decline, blaming it on a lack of new models over the past few years.