Renault plans to bolster its upscale offering with South Korean imports

Article by Christian A., on August 30, 2010

To gain a foothold in the larger car segment in Europe, Renault SA intends to boost its upscale lineup by offering South Korean imports such as the Latitude, a rebadged version of the Renault Samsung SM5. However, the effectiveness of this strategy will be hampered by French government resistance as well as worker protests.

Fabien Gache of the CGT union said in an interview that the Latitude will be the focal point for demonstrations this October at the Paris Auto Show.

The Latitude will be unveiled next week and will be assembled at Renault's Korean plant. This family car, which has been fitted with a massaging driver's seat, is the only luxury model from Renault that was entirely built abroad. Just like Fiat S.p.A., Renault is being pressured by the government to domestically produce vehicles and source parts.

Renault's share of the European market for mid-sized cars has dropped by more than half since 2003 as consumers interest in the Laguna model waned in favor of Volkswagen AG and General Motors Co. sedans. Max Warburton, a London-based analyst at Sanford C. Bernstein, said that Renault has basically been chased out of the upper segments.

Bernstein has an outperform rating on Renault. He added that offering the SM5 is a pragmatic move that enables the company to have a presence in this vehicle category.

Earlier this year, the French government, which owns 15% of Renault and appoints two members to its board, made a demand for the company to purchase more components locally. The government also forced CEO Carlos Ghosn to not pursue plans to transfer production of the Clio subcompact to Turkey.

Topics: renault, south korea

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