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Renault to aim at luxury cars

2005-11-24 11:39

"We need to increase the products, countries and markets that can be a source of profit," Carlos Ghosn told 200 engineers from the company in a speech that was partially reprinted by French magazine Capital.

Ghosn, who took over as head of Renault in late April, said that diversifying the Renault car range was a priority because the company was too dependent on the French market and its Megane family of cars.

"More than 50% of Renault's profit today comes from one product and one country. It's Megane in France ... it's too risky," he said.

Ghosn, who is also chief executive of Nissan, said that developing a top-of-the-range luxury range of cars could be part of efforts to reach new customers and markets

"The success of Nissan was based on its top-of-the-range operations. It's operational margins went from 1.5% to 10%. That was not done by bringing out more small cars," he said.

He reminded his audience that Renault had set itself ambitious sales targets.

"The company has a target. It is to sell four million cars in 2010. At last count, in 2004, we sold 2.5 million. There is another 1.5 million to do in five years," said Ghosn, who is to to unveil a three-year plan for the company on February 9.

On the subject of international development, he said that Renault would enter the Chinese market and launch the Megane brand, rather than the low-cost Logan model, "for reasons of company image".

Referring to the decision to develop in China, he added that the "only question is when", saying negotiations were underway with the Chinese authorities on selecting a factory in the country.

He also said "before looking at anything in the US, we must succeed in Brazil... in Korea... in China... in our operations in the East."

Capital magazine said that Ghosn had drawn down a veil of secrecy around his plans for the company, which he is to reveal in February.

"Before this (the three-year plan), he is keeping a complete secret, forming his thoughts bit by bit and refusing to speak to the press," Capital said.

Renault has experienced a slide in sales since the start of the year amid weakness in western Europe. It has increased temporary layoffs in its French factories to respond to the drop in demand.

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