Renault seen facing long, bumpy road in Asia<\/p>\n
TOKYO (Reuters): Renault SA's Asian push gathered steam this
\nweek with news of talks to buy Samsung Motors and reported plans
\nto build cars at Nissan Motor Co's Southeast Asian plants, but
\nanalysts warn the road ahead will be long and bumpy.<\/p>\n
Only two days after announcing it was in talks to buy all or
\npart of South Korea's troubled Samsung Motors, France's Renault
\nmade headlines again with a Japanese newspaper report that it
\nplans to use affiliate Nissan Motor's factories in Thailand,
\nMalaysia and the Philippines.<\/p>\n
The financial daily Nihon Keizai Shimbun said that, taking
\nadvantage of Nissan's underutilized Southeast Asian capacity,
\nRenault would begin production as early as 2001 with the aim of
\nbuilding 20,000 to 30,000 vehicles annually in each country.<\/p>\n
A Nissan spokesman said the two automakers would cooperate in
\nAsia but no specific plans had yet been decided upon. Renault's
\nTokyo office was closed for New Year's holidays.<\/p>\n
For Renault, with aspirations of becoming a top global
\nautomotive player, the further forays into Asia are a natural
\nnext step after its purchase of a 36.8 percent controlling stake
\nin heavily indebted Nissan last year.<\/p>\n
But while analysts say Renault is right to get into Asia and
\nshould begin its preparations now, they caution that selling cars
\nin the region has never been easy and some worry the French
\nautomaker's strategy as reported is overly ambitious.<\/p>\n
\"Even if the Asian economies recover as hoped, Renault does
\nappear to be a little too optimistic,\" said Ryuichiro Inoue, an
\nanalyst at Mitsubishi Research Institute.<\/p>\n
\"On the one hand it's natural to build on Nissan's foundations
\nin Asia but there is the problem that Nissan has never been a
\nstrong player in Asia,\" he said.<\/p>\n
Cautioning that Asian car markets were still primarily focused
\non inexpensive commercial vehicles, analysts said Renault,
\nprimarily a passenger car maker, would need plenty of patience
\nbefore it could sell 20,000 to 30,000 vehicles annually in each
\nof the three markets.<\/p>\n
The Nihon Keizai Shimbun reported that Renault's compact Clio
\nwould be made in Thailand, the Megane sedan and its sister the
\nMegane Scenic minivan in the Philippines and the Kangoo
\nrecreational vehicle in Malaysia.<\/p>\n
Investors took the report as positive for Nissan, lifting its
\nshare price 7.86 percent on Thursday to a close at 453 yen.<\/p>\n
Analysts said Renault and Nissan would have to work hard on
\nbuilding new relationships with suppliers for Renault's models,
\nas a significant portion of parts would have to be procured
\nlocally to keep costs down.<\/p>\n
In the key Thai market, Nissan has a 25 percent stake in Siam
\nNissan Automobile Co Ltd (SNA) with a local partner holding the
\nrest. The Thai factory has an annual production capacity of
\n100,000 vehicles but only made 20,000 in 1999.<\/p>\n
In the Philippines, Nissan has a 23 percent stake in Nissan
\nMotor Philippines Inc, while Japanese trading house Marubeni Corp
\nholds 17 percent and local companies the remainder.<\/p>\n
In Malaysia, Tan Chong Motor Holdings holds 70 percent of Tan
\nChong Motor Assemblies, which makes Nissan vehicles but in which
\nNissan holds no equity stake.<\/p>\n
The latest production and capacity figures were not available
\nfor the Philippine and Malaysian plants, although a Nissan
\nspokesman said output had risen significantly last year from the
\n1998 levels of 8,000 and 5,000 vehicles, respectively.<\/p>",
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