Reuters: French carmaker Renault is doing its best to meet demand for a locally produced version of the Logan no-frills car in Iran despite a liquidity crisis in the country, as 89,000 clients have already paid to take delivery, strategy chief Patrick Pelata said late on Monday. By Marcel Michelson
PARIS, Sept 25 (Reuters) – French carmaker Renault is doing its best to meet demand for a locally produced version of the Logan no-frills car in Iran despite a liquidity crisis in the country, as 89,000 clients have already paid to take delivery, strategy chief Patrick Pelata said late on Monday.
“The ramp up of production is not going as fast as we planned,” he said during a dinner meeting with journalists as part of events around the October launch of the upmarket Laguna sedan, which carries much of the French group’s aspiration to re-establish a reputation for high-quality, low-cost cars.
The Laguna, with a price tag of more than 27,000 euros ($38,000), will play only a limited part in Renault’s commitment to sell 800,000 cars per year more by 2009 than it did in 2005.
Most of the increase in volume will come from a total of six vehicles based on the Logan platform, including the Sandero car made in Latin America, and the expansion will come mainly from emerging countries outside Europe. But the Laguna will play an important role in Renault’s profit recovery plan for the period up to 2009.
In Iran, the local Logan is being assembled by Iran Khodro and Pars Khodro using some parts imported from Renault’s Dacia plant in Romania as well as parts made by Iranian subcontractors.
“There were some problems with imports but that has been solved. There are some quality issues because for some suppliers it is difficult to get their hands on the right raw materials,” Pelata said.
“In Iran there is an enormous liquidity crisis,” he said. Due to the liquidity problem it was difficult for local suppliers to obtain parts from other firms.
Pelata did not comment on any political pressure from the French government, which wants companies to restrict businesses with Iran as it prepares for possible sanctions related to the country’s nuclear programme.
“Together we have to find a solution, we cannot let the clients down. They have written out a cheque and they need to get a car or get their money back,” Pelata said, adding the last option would not be good for Renault’s reputation in a potentially growing market. But the rate of production has to increase tenfold, which cannot be done very quickly.
RUSSIA URGENT, CHINA LATER
Pelata said Renault needed to ramp up production capacity for the Logan, and recently signed a deal to build a factory in Tangiers in Morocco, but in the short term this would not alleviate the production constraints.
Meanwhile, the group remains in talks to establish a factory in Russia. One of the options is a deal with AvtoVaz and Pelata said Renault remained interested. “But for a deal the two parties need to agree,” he said. AvtoVaz is also in talks with other car constructors about possible joint ventures and Pelata said that if the firm, which makes Lada cars, struck a deal with another constructor, it would no longer be of interest to Renault.
He said the Moscow and Saint Petersburg areas had become less suited for a new factory because of high local wages but labour costs elsewhere could be lower. At the moment, Renault exports cars to Russia and runs an exchange rate risk.
The high euro is already depressing sales in Japan, where alliance partner and 44 percent subsidiary Nissan provides the dealer network and after-sales services.
“We only sell the top-of-the-range versions of Clio and Twingo. It we tried to sell an entry-level price car with the current yen/euro level, it would hurt,” Pelata said. Renault sells only 3,000 vehicles per year in Japan.
Renault is undecided over when to enter the Chinese market. Pelata said the company needed to be able fully to support such a move and was currently too occupied with other projects. Nissan is already active in China, and there is ground reserved next to a Nissan plant for when Renault decided to join.
(Reporting by Marcel Michelson, editing by Quentin Bryar)