DOUAI, France -- Renault SA unveiled the much-awaited replacement for its Megane compact car on Tuesday, vowing the new model would match its predecessor's success despite stiff competition and a poor market climate.
The French carmaker has invested 2.1 billion euros ($2.07 billion) in the new vehicle, its first mass-volume model to boast the curved back window and quirky coupe styling of its more rarified luxury models.
At a presentation to the press in Douai, northern France, where the car will be built, Renault Chairman Louis Schweitzer set out bold targets for the model, which will fight for customers in the toughest but potentially most profitable market segment.
The company aims to sell 700,000 new Meganes in its main market of Europe in a full year of production, and 5.5 million in total in the life of the vehicle, 10 percent more than the older version, he said.
Such a performance would secure Renault a 14 percent share of a segment dominated by Volkswagen AG's Golf and Ford Motor Co's Focus. The segment is the largest, accounting for 35 percent of all automobile sales.
The first Megane, launched in 1995, was a smash hit that brought in a massive chunk of Renault's profits in its heyday of the late 1990s.
Most of that success came with a taller minivan version of the car, the Scenic, which inaugurated an entirely new class of roomy vehicle popular with families.
Renault's financial reliance on one model later became its key weakness as the vehicle began to age and competitors PSA Peugeot Citroen and Volkswagen brought out their own alternatives to the Scenic.
Core earnings from Renault's automaking activities are expected to drop close to zero this year after slumping in 2001, leaving its 44.4 percent stake in Japanese alliance partner Nissan Motor Co. as its main source of cash.
In a drive to take its brand upmarket to rival the profit performance of its German neighbors, Renault has shifted towards a more futuristic and luxury image in the past year with its larger Avantime and Vel Satis.
BODY STYLES PROLIFERATE
But it is the Megane and smaller Clio that will make or break the manufacturer in terms of profits.
With the European car market in decline and the number of vehicle styles proliferating, analysts are skeptical over Renault's ability to repeat the Megane's past performance, though the company is staying optimistic.
The number of Megane body styles has been increased to cater to the tastes of a larger group of customers, while behind the scenes operating costs have been slashed, partly with help from Nissan.
The company hopes that the minivan form of Megane will not monopolize profits this time and that other spin-offs, including a cabriolet and coupe version, will meet with equal success.
"I think we'll have the capacity to generate stronger profit margins with the non-Scenic versions," Renault Executive Vice President Pierre-Alain de Smedt told reporters in Douai.
Development of the new car took only 29 months, compared to 47 months for the first Megane.
The new vehicle represents a leap in the manufacturer's Japanese alliance, being the first Renault produced using a common assembly system with Nissan, the so-called C-Platform.
Nissan already makes the March, or Micra in Europe, on a "B-Platform" which will be shared by Renault's Clio replacement from 2004.
De Smedt said Renault was aiming for a 25-percent gain in productivity with the new Megane as assembly times are speeded up and more procurement and operational costs are pooled with Nissan.
The Megane II will go on sale in its standardized form in September, while the spin-offs will roll out over the following 18 months.