PARIS -- French car maker Renault aims to enter the Chinese market with its best-selling Megane compact-sized car, and not with the no-frills Logan, President and Chief Executive Charles Ghosn told an internal meeting according to the Capital monthly magazine on Wednesday.
A spokesman for Renault confirmed the speech was made, a few months ago, but declined to comment on what the company considered internal discussions. Ghosn, also the head of Renault's Japanese alliance partner Nissan, is due to unveil a new three-year strategy for Renault on Feb. 9.
Renault last week shocked the markets with a downward revision of its 2005 operating profit target, to more than 3 percent, in the face of sluggish markets. The group had maintained its target of over 4 percent less than a month earlier with third-quarter results, hoping the launch of the Clio III compact car would help it remain on track.
According to the transcript of the speech to be published by the magazine on Thursday Ghosn maintained a company target of making 4 million cars per year by 2010 and eventually aims to enter the market in the United States.
Korea's car group Renault Samsung Motors, in which Renault has a 70 percent stake and Samsung Group and creditors the other 30 percent, needs to become "the Asian base for Renault," he was quoted as saying.
Ghosn said in the speech that at the moment 60 percent of the company's profits depended on France, which makes up just 3.5 percent of the world market. And in France it depended on the Megane model, which is ageing, and its Scenic.
"That is too vulnerable. We need to multiply products, countries, markets that can be sources of profit. If not we end up with a Fiat syndrome, overdependent on one segment, one country. That is a time-bomb," he was quoted as saying.
"We will go into China. The only question is when. We do not want to go there with Logan (the sucessful no-frills car made by Romanian unit Dacia) but with Megane, because of branding considerations. Even though at the moment the purchasing power of the Chinese is not very high, they are very demanding about quality and appearance," he said.
Ghosn said the company was in negotiations with the Chinese authorities about where to base a factory -- with the Chinese wanting a site in a region with unemployment and Renault wanting to remain near big population centers.
Samsung needed to become a beachhead in Asia, he said.
"We need to make Renault-Samsung products capable of maintaining our position in Korea and export Renault products in Asia," he was quoted as saying.
About the United States market, Ghosn said this could only be addressed with a solid product line-up.
"We will attack the American market with all our resources, with a totally dedicated range of products, knowing full well that when we don't do it well we risk losing all," he said.
"It's a high-risk, high-reward situation -- if you do it well you can gain a lot. But before we can do anything at all in the United States we have to succeed in Brazil, we need to succeed in Korea, we need to succeed in China and we need to make a success of our presence in the East," Ghosn said.
He added the launch of the Twingo small car had been delayed, until 2007, to review the project in the light of new developments which reduced the expected sales volume.