Renault was ordered by the French government on Wednesday to keep the
production of its new Clio small car in France rather than shift it to
lower-cost Turkey.

Christian Estrosi, industry minister, told Patrick Pelata, Renault’s chief
operating officer, that the government, which holds a 15 per cent stake in
Renault, opposed any plans to move production of the best-selling model to
the company’s Bursa factory in Turkey when the new Clio mark IV is launched
in 2013.

After a meeting with Mr Pelata, Mr Estrosi said: “I made clear to him that
we’re not in favour of producing the Clio IV in Turkey. It would seem that
our message has been understood.”

The minister said it was “the will of the state that should be respected in
Renault’s future choices”.

Mr Pelata said no decision had yet been made on where to produce the Clio IV.
He gave an assurance that the Clio would still be made at Flins, near Paris,
when the site switches over to the production of electric cars and
batteries, but he did not specify whether this meant the Clio IV or older
versions of the car.

Ankara angry
The French government’s strong opposition to the production of the Clio in
Turkey is likely to go down badly in Ankara, which is already fuming at
French resistance to Turkish membership of the European Union.

The French stance could also rekindle concern in the EU that Paris is intent
on favouring French plants over others elsewhere in the trading bloc,
putting it in potential breach of the single market rules.

Mr Pelata said that Renault would cease production of Clios in Spain and
Slovenia, although he did not indicate whether these plants were ever in
line to build the Clio IV.

Nicolas Sarkozy, French president, who has vowed to maintain France as a
manufacturing nation, has summoned Carlos Ghosn, Renault’s chief executive,
to the Elysée Palace later in the week to explain the carmaker’s strategy.

Renault last year promised to forego compulsory redundancies and plant
closures in France in return for a €3bn ($4.3bn) loan from the government to
stave off a liquidity crisis.

Its sales have been propped up by France’s €600m scrappage scheme. The company
will also get €250m in government aid to produce electric cars and batteries
at its Flins site.

Criticised by government
Renault has been criticised by the government and unions for shifting the
production of its smaller, lower-margin cars to lower-cost plants abroad
even when these are destined for the French market.

The unions claim that only 25 per cent of Renault’s production by units comes
from the French factories.

Mr Pelata said that 55 per cent of production by added value was based in the
home market.

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