CURITIBA, Brazil - Do you really need a full-scale wedding like DaimlerChrysler to survive in the auto industry, or is it better to simply live together?
Renault SA Chairman Louis Schweitzer firmly believes in the latter. He's convinced that it makes sense for manufacturers to share plants, as Renault does with Toyota in Colombia, instead of committing to a binding equity marriage.
'It doesn't have to be a marriage. It's like sharing an apartment with a friend - you might outgrow each other and one will move out,' he said.
This approach might not make sense in a country like Brazil or Russia, where the market potential is enough to support a dedicated assembly plant, said Schweitzer.
But in smaller countries like Thailand and the Philippines, where potential is more limited, it would be better to share capacity of existing plants, he said.
Ambitious production goal
Schweitzer was in Brazil to open Renault's $1 billion greenfield assembly plant in Curitiba, the first stage of a plan to raise the French automaker's annual worldwide production from 2.2 million vehicles in 1998 to 4 million by 2010.
The plant is scheduled to produce 120,000 Megane Scenic minivans and Clio IIs a year on three shifts, six days a week.
The worldwide expansion, aimed at cutting Renault's reliance on Western European sales to 50 percent, from 83 percent now, will be led by a product lineup that the company promises will be as innovative as the Megane Scenic minivan or, in its time, the Twingo.
These include a new sport-utility, due at the end of 1999, built off the Megane platform and developed as a world vehicle. It also includes a pickup and a $6,000 car designed for emerging markets.
The new car could be badged as a Dacia if Renault, as expected, wins the bidding for Romania's state-owned carmaker.
Russia looks attractive
Apart from South America, Russia and the countries of the former Soviet Union are high on Renault's priority list. North America is not.
'In Russia, there is an advantage in not going too fast at the moment. We are spending time on red tape, if not actually spending money,' said Schweitzer.
Renault's 50-50 partner in Russia is the Moscow city government, which controls 60 percent of local automaker AO Moskvich.
'The city government has money and strong leadership, so they make a very good partner for us,' Schweitzer said.
China's problems complex
Despite the difficulty of working in Russia, the problems there are simple when compared with China, Schweitzer said. Renault builds the Trafic van there in partnership with China Sanjiang Space, a Wuhan-based aircraft company.
'In China, for example, we have to make the Trafic as a nine-seat minibus. We're not allowed to put 16 seats in it,' he said. 'But we are learning about doing business in China.'
Like most western auto executives, Schweitzer sounds more than a little dazzled by China's potential.
'Some 80 percent of the world's cars are sold in Western Europe, the United States, Japan and Korea, which are home to only 20 percent of the world's population,' he said.
'But in China, which has a population of 1.5 billion, they have the same number of cars as Holland, with a population of 15 million. So it's wise to be there, even though we lose money on every car we sell.'
Schweitzer said two words summed up the company's philosophy toward global expansion: profitable growth.
'You cannot just earn money, you must also have growth,' he said.
But Executive Vice President Carlos Ghosn, Schweitzer's strong No. 2 executive, stressed that Renault strategy is based on growing alone.
'If a superb opportunity came we might take it,' he conceded. 'But a company with too many objectives is lost. It will have no sense of direction or priority, and this is a killer.'