March 13, 2013 / 12:40 PM / in 5 years

Renault to assemble more cars for partners under union deal

PARIS, March 13 (Reuters) - Renault will announce plans within months to build more vehicles for Daimler or alliance partner Nissan after reaching a new deal with unions, the French carmaker said.

Under the agreement signed on Wednesday, Renault pledged to produce 80,000 vehicles annually for the partner brands, helping safeguard French jobs as demand for new cars slumps in Europe.

Chief Executive Carlos Ghosn conceded that the deal’s success will depend partly on winning back customers for Renault’s own brand in a market near its weakest in 20 years.

“A part of this increase must come from the growth of Renault’s market share in Europe,” Ghosn said.

In return for wage restraint and other union concessions including longer working hours, Renault promised to increase annual domestic production by about a third, or 180,000 vehicles, to 710,000 by 2016.

Ghosn, who had previously threatened to move some production out of France if no deal was reached, said some manufacturing could now be repatriated as a result of the agreement.

Renault plans to return production of its Trafic commercial van to northern France from Spain, and some versions of its Clio subcompact car to Flins, west of Paris, from Turkey.

Ghosn declined to comment on recent press reports that Renault had dropped plans for an upscale model derived from the Mercedes-Benz E-Class, and that Daimler was planning to assemble A- and B-Class models at its French partner’s plants.

“By the end of 2013 and probably before the summer we will be in a position to announce part or all of these 80,000 vehicles - the sites, production and brands,” he told reporters at Renault headquarters near Paris.

“It’s a matter of a few months at the most or even weeks.”

Renault won agreement on the new deal last week from unions representing almost two thirds of its workforce and signed the accord on Wednesday with representatives of the CFDT, FO and CGC labour groupings. The left-wing CGT has refused to accept the pact.

Renault also promised under the deal not to close any production sites or resort to lay-offs within the next three years. It plans to cut some 7,500 domestic jobs over the same period, without compulsory redundancies.

The accord represents a “necessary balance to improve competitiveness and safeguard the future of France’s industrial fabric”, CFDT spokesman Fred Dijoux said after the formal signing.

The agreement will generate annual savings of about 500 million euros ($651 million), Ghosn said in a newspaper interview published earlier on Wednesday.

Renault shares were down 1.5 percent at 53.34 euros at 1139 GMT. (Reporting by Laurence Frost; Editing by Tom Pfeiffer)

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