MEXICO CITY - Renault SA will spend $400 million over seven years to re-enter the North America car market, using Nissan's Mexican assembly plants as its production base.
Renault Chairman Louis Schweitzer said last week in Mexico City that Renault will create a new Mexican sales subsidiary that will begin marketing vehicles there in 2001.
Declaring that Renault has no intention of re-entering the U.S. market, Schweitzer predicted Mexican sales of 30,000 vehicles a year in 2003, and eventually reach 80,000.
The new Renault plan is a concrete sign of synergy between the French automaker and its new partner, Nissan Motor Co. Ltd. Renault bought controlling interest in Nissan earlier this year, and has stated its desire to share factories or products with Nissan - possibly in Mexico.
According to the plan laid out last week by Schweitzer and Nissan CEO Yoshikazu Hanawa, Renault will invest $400 million in Nissan's two Mexican auto plants. Production will start with the Renault Megane Scenic at Nissan's Cuernavaca plant in 2001, and follow with a new generation Clio in 2002 at the Aguascalientes plant.
The chairmen also announced Nissan and Renault will develop a new car to be produced in Mexico after that.
Schweitzer reasoned that building Renaults in Mexico will help Nissan in the United States.
Mexico has been a money drain for Nissan in recent years as its factories there operated far under capacity. Mexican losses have dampened Nissan's efforts to expand in the United States.
Hanawa said the Renault plan will correct that problem. 'Our plant utilization will rise from the currently 70 percent to very close to 100 percent' Hanawa said.
Renault built and sold cars in Mexico between 1960 and 1986, at which time it withdrew from both the Mexican and U.S. markets.
Schweitzer said Renault will also import vehicles into Mexico once its sales company is up and running.
'The majority to be sold here will be Mexican-made, but we will give a complete line to our customers,' Schweitzer said.
He said Renault's dealer network will have 50 stores by 2003, initially in Mexico City, Guadalajara and Monterrey. Nissan's Mexican dealers will have first option.
Nissan will provide Renault with back-office retail support, handling logistics, parts and other functions. Renault Credit International will serve both Nissan and Renault.