Renault SA, struggling to maintain a European foothold in larger cars, plans to bolster its upscale offering with South Korean imports. The strategy may be hampered by worker protests and French government resistance.
A version of the Renault Samsung SM5 sedan, to be unveiled next week and assembled at the French company’s Korean plant, will be a focus for demonstrations at the Paris Motor Show in October, Fabien Gache of the CGT union said in an interview. The family car, which features a massaging driver’s seat, would be Renault’s only luxury model entirely built outside of France.
Like Fiat SpA, Renault is under increasing government pressure to build vehicles and source parts at home. Renault’s share of the European market for mid-sized cars has slumped by more than half since 2003 as consumers shunned the Laguna model in favour of Volkswagen AG and General Motors Co sedans.
“They’ve basically been chased out of the upper segments,” said Max Warburton, a London-based analyst at Sanford C Bernstein, who has an “outperform” rating on Renault. Introducing the SM5 is “a pragmatic move that allows them to keep something on the road in this vehicle category.”
The French government, which owns 15 per cent of Renault and appoints two members to its board, this year demanded that the automaker buy more components locally and forced Chief Executive Officer Carlos Ghosn to backtrack on plans to move production of the Clio subcompact to Turkey.
Renault shares have fallen 8.5 per cent this year. The stock fell 0.1 per cent to 33.13 euros in Paris yesterday.
